June 14, 2024

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Stocks rally ahead of a flurry of interest rate decisions: Markets wrap

Stocks rally ahead of a flurry of interest rate decisions: Markets wrap

(Bloomberg) — Stocks rose as traders braced for a week filled with interest rate decisions from major central banks. Tesla Inc is poised to post a record winning streak after positive news broke out for the electric car maker.

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Consumer products and auto stocks led the advance in Europe, while surging US futures indicated further advances into bull market territory for the S&P 500 index. Adidas AG rose after an upgrade from analysts at Bernstein who cited improved perceptions of the German sportswear brand. Tesla shares rose in pre-market trading, heading for a 12th day of gains. The company’s supercharger is leading the race to become the industry standard in the United States.

Investors’ busy calendar begins with the US inflation report on Tuesday, the eve of the Federal Reserve’s latest policy decision. Positioning in the rate markets suggests the Fed will hike again, with the move likely to come next month rather than Wednesday.

“The pace at which policy rates rise is slowing, or stopping, but that doesn’t mean the cycle to hike is effectively over,” said Kevin Thousette, a member of the investment committee at Carminac Gestion. “Central banks depend on economic data, so we must prepare for a variety of scenarios.”

The merger and acquisition news provided a strong boost to stock market sentiment. Novartis AG has agreed to acquire Chinook Therapeutics Inc. For $3.5 billion to add two promising treatments for a rare kidney disease. Teck Resources Ltd. said: It is taking on Glencore Plc’s offer to buy its coal business for cash.

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In other deals, Swiss industrial company Georg Fischer AG has offered to take over Finnish plumbing equipment manufacturer Aponur Uig. Mike Ashley’s Frasers Group Plc has bought a stake in online electronics retailer AO World Plc, while Thyssenkrupp AG has begun a long-planned initial public offering for its Nucera hydrogen unit.

Energy stocks were the biggest slowdown in European trading as oil prices extended losses amid persistent concerns about the demand outlook, as Goldman Sachs Group Inc. Her predictions for the price again. Miners were also weaker after iron ore slumped nearly 5%, falling for the first time in nine sessions on fears of weakness in China’s real estate industry.

Treasury yields rose about 2 basis points for both the two- and 10-year maturities. The Bloomberg Dollar Scale tracked lower.

While the consensus is for the Federal Reserve to pause this week, unexpected hikes last week from the Bank of Canada and the Reserve Bank of Australia added an additional element of uncertainty to the markets. The European Central Bank is expected to raise its benchmark interest rate on Thursday and the Bank of Japan is expected to sit still on Friday.

Add to that concerns about growth in China. The People’s Bank of China will have an opportunity to add more monetary stimulus on Thursday, though the majority of economists surveyed by Bloomberg expect no change in rates yet.

The S&P 500 is up more than 20% from October, a common indicator of a bull market, but Wall Street’s top strategists are divided on what comes next.

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Strategists at Goldman Sachs expect the gains to continue as other sectors catch up with the sharp rise in technology stocks. Meanwhile, Morgan Stanley’s Michael Wilson points instead to the example of the bear market in the 1940s, when the S&P 500 surged 24% before returning to a new low.

Main events this week:

  • US Consumer Price Index, Tuesday

  • The Federal Open Market Committee begins a two-day meeting, Tuesday

  • Eurozone Industrial Production, Wed

  • US Producer Price Index, Wednesday

  • FOMC rate decision, Wed

  • The International Energy Agency’s Oil Market Report was released on Wednesday

  • China’s central bank meeting to decide on one-year loan rate policy, Thursday

  • China real estate prices, retail sales, industrial production, Thursday

  • European Central Bank interest rate decision, Thursday

  • US initial jobless claims, retail sales, imperial manufacturing, business inventories, and industrial production

  • Eurozone CPI, Friday

  • Bank of Japan interest rate decision on Friday

  • Consumer confidence in the American University of Michigan, Friday

Some of the major moves in the markets:

Stores

  • The Stoxx Europe 600 Index is up 0.5% as of 9:50 am London time.

  • S&P 500 futures rose 0.3%

  • Nasdaq 100 futures rose 0.5%.

  • Futures on the Dow Jones Industrial Average rose 0.2%.

  • The MSCI Asia Pacific Index rose 0.4%.

  • The MSCI Emerging Markets Index rose 0.2%.

currencies

  • The Bloomberg Spot Dollar Index fell 0.2%.

  • The euro rose 0.3 percent to $1.0779

  • The Japanese yen rose 0.2% to 139.18 per dollar

  • The external yuan was little changed at 7.1499 per dollar

  • The British pound rose 0.2 percent to $1.2592

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Digital currencies

  • Bitcoin fell 0.9 percent to $25,894.34

  • Ether fell 1.6% to $1,742.21

bonds

  • The yield on the 10-year Treasury note advanced 2 basis points, to 3.76%.

  • Germany’s 10-year yield advances 1 basis point to 2.39%

  • The UK 10-year yield advanced five basis points to 4.29%.

goods

  • Brent crude fell 1.8 percent to $73.42 a barrel

  • Spot gold rose 0.2 percent to $1,964.36 an ounce

This story was produced with help from Bloomberg Automation.

– With assistance from Tassia Sipahutar.

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