Stock Futures Edge Higher on Fed Rate-Cut Bets: Markets Wrap

(Bloomberg) — European stock futures pointed to a positive start for the region as traders bet the Federal Reserve will cut interest rates next year.

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Wagers for a Fed pivot helped propel a gauge of Asian equities to an 8% gain in November following three straight months of losses. Europe’s Euro Stoxx 600 futures rose 0.5%, putting the index on course for its best month since January. US stock futures edged higher.

China’s equities have emerged as an outlier amid the global rally this month on concerns about the growth outlook, with a report Thursday showing the nation’s manufacturing and services sectors shrank in November.

“Still-weak data may see authorities laying more options of policy support on the table, while markets continue to seek the conviction for a sustained recovery” in China, said Jun Rong Yeap, market analyst at IG Asia Pte.

Meanwhile, a gauge of global stocks was headed for its best month in three years amid wagers for Fed rate cuts. The dollar weakened against all its Group-of-10 peers.

Treasuries slipped following Wednesday’s gains ahead of a speech by Fed Chair Jerome Powell on Friday.

The litmus test would be “whether or not Powell reinforces the dovish messages” of other Fed speakers this week, George Bory, chief investment strategist for fixed income at Allspring Global Investments LLC, told Bloomberg TV. “We think the market is getting a little ahead of itself certainly in the front-end of the curve.”

Bond bulls latched onto earlier comments from Fed officials, juicing a rally in November that has placed a gauge of global sovereign and corporate debt on track for the best month since 2008.

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Hard data provided support for a soft landing for the US economy. Economic activity slowed in recent weeks as consumers pulled back on discretionary spending, the Fed said in its latest “Beige Book”. Gross domestic product rose at the fastest pace in nearly two years, while consumer spending advanced at a less-robust rate and the Fed’s preferred inflation metric — the personal consumption expenditures price index — was revised lower.

Meanwhile, Japanese bonds rebounded from losses that were fueled by a weak auction of two-year sovereign debt.

Elsewhere, oil rose for a third day as traders count down to a key meeting that will see OPEC+ set output policy into the new year. Gold was little changed after a five-day rally. Bitcoin hovered near the $38,000-mark.

ASML Holding N.V. said it plans to appoint Christophe Fouquet to the chief executive’s role when its two co-presidents retire in 2024.

In India, Tata Technologies Ltd., the first company from the salt-to-software conglomerate to list since 2004, more than doubled in its trading debut.

Shares in Chinese developer Powerlong Real Estate Holdings Ltd. were headed for their worst day since March after the builder defaulted on a dollar bond as it struggles with sluggish sales and worsening liquidity.

Later Thursday, inflation and unemployment data for the Eurozone will be released, as will US jobless claims and the PCE deflator.

Key events this week:

• OPEC+ meeting, Thursday

• Eurozone CPI, unemployment, Thursday

• US personal income, PCE deflator, initial jobless claims, pending home sales, Thursday

• China Caixin Manufacturing PMI, Friday

• Eurozone S&P Global Manufacturing PMI, Friday

• US construction spending, ISM Manufacturing, Friday

• Fed Chair Jerome Powell to participate in “fireside chat” in Atlanta, Friday

• Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 3:49 p.m. Tokyo time. The S&P 500 fell 0.1%

• Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 0.1%

• Hong Kong’s Hang Seng rose 0.3%

• The Shanghai Composite rose 0.2%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.1% to $1.0981

• The Japanese yen rose 0.2% to 146.93 per dollar

• The offshore yuan rose 0.2% to 7.1309 per dollar

Cryptocurrencies

• Bitcoin rose 0.2% to $37,826.45

• Ether rose 0.2% to $2,033.2

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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