(Bloomberg) — European and US stock futures rose as the focus shifted from Middle East tensions to company earnings and economic data for insight into the direction of central bank policy.
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Contracts on the Euro Stoxx 50 climbed 0.4% while S&P 500 futures advanced by a similar magnitude after the US gauge recorded its worst week since March 2023. Benchmarks across Asia recouped some of last week’s slide as traders took comfort in the absence of further escalation from Iran following Israel’s retaliatory strike.
Demand for safe havens eased, after traders last week were whipsawed by Middle East tensions as well as hawkish comments from Federal Reserve officials indicating reluctance to cut rates anytime soon. Oil and gold both fell. A Bloomberg dollar index slipped 0.1% while the yield on 10-year US Treasury yields advanced three basis points.
“We are seeing a relief rally underway this morning as geopolitical risks subside,” said Kyle Rodda, a senior market analyst at Capital.com in Melbourne. “The move basically squares the ledger now and allows the markets to go back to focus on macroeconomic and corporate fundamentals.”
Mainland Chinese shares declined as the country’s lenders kept the loan prime rates steady. The Hang Seng Index outperformed, with measures from Chinese authorities to bolster the city’s status as a financial hub giving an added boost.
Asian chip stocks slumped Monday after Nvidia fell 10% in the US session, contributing to a more than 2% drop in the Nasdaq 100.
Investors are recalibrating their positions after a solid run of US data forced the Fed to reset the clock on its first interest rate cut. Data prints later in the week are likely to help finesse policy bets, with both US growth and the Fed’s preferred measure of inflation due.
Investors must also absorb a hefty slate of Treasuries auctions, a major test of whether yields have peaked for the year.
Higher-than-expected interest rates amid persistent inflation are perceived as the biggest threat to financial stability among market participants and observers, the Fed said in its semiannual Financial Stability Report published Friday.
More than half of the “Magnificent Seven” cohort of tech megacaps will report earnings this week — leaving investors wondering whether those firms are going to live up to the high expectations set for artificial intelligence. “Nevertheless, this may offer market participants the opportunity to watch for any signs of weakness in rallies to sell the rip.”
“This week will present a slew of big tech earnings, which has the tendency to crush earnings expectations,” said Jun Rong Yeap, a market strategist at IG Asia.
Profits for the seven biggest growth companies in the S&P 500 — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia, Meta Platforms Inc. and Tesla Inc. — are on course to surge 38% in the first quarter, according to Bloomberg Intelligence. When excluding them, the rest of the benchmark index’s profits are anticipated to shrink by 3.9%.
Elsewhere this week, inflation readings in Australia and Malaysia are due. Bank Indonesia will give a policy decision just as the currency comes under pressure, while earnings at global growth bellwether Caterpillar are due.
Key events this week:
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Eurozone consumer confidence, Monday
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Philippines and US military forces commence annual war games near Taiwan and South China Sea, Monday
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ECB President Christine Lagarde speaks, Monday
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Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Tuesday
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UK S&P Global, CIPS Manufacturing PMI, Tuesday
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Australia CPI, Wednesday
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Indonesia rate decision, Wednesday
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IBM, Boeing, Meta Platforms earnings, Wednesday
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Malaysia CPI, Thursday
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South Korea GDP, Thursday
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Turkey rate decision, Thursday
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US GDP, wholesale inventories, initial jobless claims, Thursday
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Microsoft, Alphabet, Airbus, Caterpillar earnings, Thursday
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Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday
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US personal income and spending, University of Michigan consumer sentiment, Friday
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Exxon Mobil, Chevron earnings, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 6:34 a.m. London time
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Nikkei 225 futures (OSE) rose 0.5%
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Japan’s Topix rose 1.1%
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Australia’s S&P/ASX 200 rose 0.9%
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Hong Kong’s Hang Seng rose 1.9%
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The Shanghai Composite fell 0.5%
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Euro Stoxx 50 futures rose 0.4%
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Nasdaq 100 futures rose 0.5%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was little changed at $1.0665
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The Japanese yen was little changed at 154.71 per dollar
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The offshore yuan was little changed at 7.2518 per dollar
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The Australian dollar rose 0.2% to $0.6431
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The British pound rose 0.1% to $1.2383
Cryptocurrencies
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Bitcoin rose 1.9% to $65,915.35
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Ether rose 1.9% to $3,210.29
Bonds
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The yield on 10-year Treasuries advanced four basis points to 4.66%
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Japan’s 10-year yield advanced 3.5 basis points to 0.880%
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Australia’s 10-year yield advanced seven basis points to 4.33%
Commodities
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West Texas Intermediate crude fell 0.8% to $82.45 a barrel
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Spot gold fell 0.9% to $2,369.21 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu, Matthew Burgess, Michael G. Wilson, Richard Henderson and Tassia Sipahutar.
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