China Stocks Eye Gains; S&P 500 Steady On Powell: Markets Wrap

China Stocks Eye Gains; S&P 500 Steady On Powell: Markets Wrap

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(Bloomberg) — European stocks edged higher following fresh highs for US equities as traders held to bets the Federal Reserve will cut interest rates this year.

The Euro Stoxx 600 benchmark climbed about 0.2% before paring the advance. Basic resources stocks declined as prices for crude oil and base metals fell. Futures on the S&P 500 and Nasdaq 100 were little changed as traders parsed comments from Fed Chair Jerome Powell about the US economy.

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The S&P 500 climbed for a sixth consecutive session on Tuesday, its longest winning streak since January, after Powell emphasized mounting signs of a cooling job market in remarks to lawmakers on Tuesday. The Nasdaq 100 also hit a record. Swap traders continue to project two rate cuts in 2024. 

Treasuries were steady, with yields on two-year securities hovering near a three-month low on bets they would more likely benefit from policy easing. A gauge of the dollar was little changed.

Powell’s comments “continued to move toward preparing the market for a cut in rates later this year,” said Michael Feroli at JPMorgan Chase & Co. “Powell largely stuck to the script when it came to the economy.”

Further Congressional testimony by Powell on Wednesday, and key US inflation and jobs data tomorrow, may provide further clues on the policy path.

Among individual stock moves in Europe, Spanish untility Enagas SA climbed more than 4% after agreeing to sell its 30% stake in US pipeline firm Tallgrass Energy to Blackstone Infrastructure Partners.

Elsewhere, Japanese stocks advanced, while those in China and Australia declined, leaving a gauge of the region’s shares little changed.

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China’s consumer prices eked out another small gain in June, hovering near zero for a fifth month, a sign that deflationary pressures continue to impede an economic recovery. Factory-gate prices remained stuck in deflation.

Bond traders are getting ready for China to start pushing back on record-low yields, with the central bank now armed with “hundreds of billions” of yuan of securities at its disposal to sell.

In commodities, oil edged lower as concerns about Chinese demand and continued uncertainty over the timeline for Federal Reserve interest-rate cuts outweighed signs of another inventory draw in the US. Copper and iron ore declined, while gold was steady.

Key events this week:

  • Jerome Powell testifies to the House Financial Services Committee, Wednesday
  • Fed’s Austan Goolsbee, Michelle Bowman and Lisa Cook speak, Wednesday
  • US CPI, initial jobless claims, Thursday
  • Fed’s Raphael Bostic and Alberto Musalem speak, Thursday
  • China trade, Friday
  • University of Michigan consumer sentiment, US PPI, Friday
  • Citigroup, JPMorgan and Wells Fargo earnings, Friday

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Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.1% as of 8:13 a.m. London time
  • S&P 500 futures were little changed
  • Nasdaq 100 futures rose 0.1%
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 0.1%
  • The MSCI Emerging Markets Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0821
  • The Japanese yen was little changed at 161.37 per dollar
  • The offshore yuan was little changed at 7.2921 per dollar
  • The British pound was little changed at $1.2796
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Cryptocurrencies

  • Bitcoin rose 2% to $59,106.07
  • Ether rose 1.2% to $3,107.75

Bonds

  • The yield on 10-year Treasuries declined one basis point to 4.28%
  • Germany’s 10-year yield declined four basis points to 2.54%
  • Britain’s 10-year yield declined four basis points to 4.12%

Commodities

  • Brent crude fell 0.7% to $84.05 a barrel
  • Spot gold rose 0.4% to $2,372.49 an ounce

This story was produced with the assistance of Bloomberg Automation.

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