April 18, 2024

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European stocks rebound, China’s interest rate move helps sentiment

European stocks rebound, China's interest rate move helps sentiment

LONDON (Reuters) – Stocks rebounded on Friday after China cut a key lending benchmark to support its economy, although a gauge of global stocks remained set for its longest-ever streak of weekly losses amid investor concerns about slowing growth and rising inflation.

China cut the five-year loan base interest rate (LPR) – which influences mortgage pricing – by 15 basis points on Friday morning, a sharper drop than expected, as authorities seek to mitigate the impact of an economic slowdown. I left the LPR for one year unchanged. Read more

At 1053 GMT, Stokes 600 pan-European (.stoxx) It rose 1.6% and is poised for its first daily gain in three.

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MSCI World Stock Index (.MIWD00000PUS), which measures stocks in 50 countries, is up 0.5% but this week it was still down 1% and heading for its seventh consecutive weekly decline, its longest losing streak since it started in 2001. It will also be the longest including testing back. The data extends back to January 1988.

US stock futures indicated Wall Street would follow suit, with the S&P 500 e-minis futures up 1.1%, the Dow futures up 0.9%, and the Nasdaq 100 futures up 1.4%.

“Obviously investors are looking to do some bargaining, because some stocks look very cheap right now,” said Nathan Sweeney, vice president of information at Marlboro Investment Management.

He added that the Chinese LPR cut “shows that not all central banks are trying to create an environment where the market sells at lower prices.”

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Eurozone bond yields rose after two days of sharp declines as risk sentiment improved after China cut interest rates.

The German 10-year government bond yield rose 5 basis points at 0.989%, still below last week’s eight-year high of 1.189%.

Money markets are now pricing in 38 basis points of tightening from the European Central Bank by its July meeting. This indicates that the 25 basis point rise is fully priced in, and the markets are pinning a ~52% probability of an additional 25 basis point move. Read more

“The July rate hike appears to be a deal-breaker, as does September to zero deposit rates,” analysts at Bank of America Global Research said in a research note.

“Our conviction of four rate hikes in total this year is on the rise, and chances are the noise will move in the direction of the 50 basis point rise over the 25 basis point we are still expecting.”

The US 10-year yield was 2.864%, up one basis point from Thursday’s close, and down from a high of 2.873% earlier on Friday. The two-year yield rose twice to 2.631% compared to the US close at 2.611%.

In the currency markets, movements were relatively muted with little change in the dollar but still heading for its worst week since early February, after a 10% rally for 14 weeks.

The dollar index, which measures the currency against six major competitors, fell 0.1% to 102.84.

Gold prices have been firmer and heading for their first weekly gain since mid-April as the dollar weakened. Spot gold was up 0.2% at $1,846 an ounce, after rising 1.4% to a one-week high on Thursday.

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Oil prices were mixed as investors manipulated a weak global economic growth outlook and the central bank’s monetary policy tightening with a planned European embargo on Russian oil. Read more

Brent crude futures for July rose 27 cents, or 0.24%, to $112.30 a barrel, while US West Texas Intermediate crude for June fell 19 cents, or 0.17%, to $112.02 on its last day as the nearest month. .

The most active West Texas Intermediate crude contract in July was up 6 cents at $109.95 a barrel.

Bitcoin price was flat at $3,301. Smaller competitor Ether rose 1% to $2,037.

Global stocks drop by $13 trillion
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Additional reporting by Samuel Indyk in London and Andrew Galbraith in Shanghai; Editing by John Stonestreet and Hugh Lawson

Our criteria: Thomson Reuters Trust Principles.