Nasdaq futures signaled further gains in US tech shares after Monday’s rally, while the sector also outperformed in Europe and Asia.
Contracts on US stock gauges rose, with those on the Nasdaq 100 Index rising 0.4%. The tech-heavy benchmark surged 1.7% on Monday as Nvidia Corp jumped amid optimism about its earnings due this week. Treasuries steadied, pausing a selloff that had driven benchmark yields to 16-year highs.
A late surge in Chinese shares boosted sentiment in Asia, with key mainland equity indexes rebounding from oversold levels. In Europe, tech led the advance and miners outperformed amid a fourth day of gains for iron ore.
SoftBank Group’s semiconductor unit Arm filed for what is set to be this year’s largest US initial public offering.
Treasury yields were little changed after Monday’s selloff, when the yield on 10-year inflation-protected Treasuries pushed beyond 2% for the first time since 2009. The yield on 10-year notes without that protection hit a level last seen in late 2007 as investors await a speech later in the week by Federal Reserve Chair Jerome Powell for clues on the outlook for US interest rates.
The dollar weakened against most of its Group-of-10 peers. The offshore yuan steadied after the People’s Bank of China implemented the strongest fixing on record on the currency as the central bank continues its battle against yuan bears. The one month offshore yuan interbank interest rate jumped to highest since 2018.
Powell will speak Friday at the Kansas City Fed’s Jackson Hole Economic Policy Symposium after officials last month lifted rates to a range of 5.25% to 5.5%, the highest level in 22 years. Minutes from the gathering showed policymakers still saw significant risks that inflation could remain higher than they expect — which could keep rates elevated.
“Each incremental hike that they have from here just raises the risk that we have a much sharper slowdown in 2024 and perhaps even a recession,” Lori Heinel, chief investment officer at State Street Global Advisors, said on Bloomberg Television. “So as long as inflation remains contained, we think that they will take a pause here.”
Two-thirds of 602 respondents in Bloomberg’s latest Markets Live Pulse survey say the Fed has yet to conquer inflation. And over 80% of those surveyed said Powell’s Jackson Hole speech will reinforce the message of a hawkish hold.
The speeches from Fed chiefs at the Jackson Hole conference have typically buoyed stocks since the turn of the millennium, data compiled by Bloomberg Intelligence show. But last year equities slumped 3.2% in the week following Powell’s remarks after he warned of keeping policy restrictive to battle inflation.
In emerging markets, leaders of the Brics nations will focus on ways to reduce dependence on dollars when they meet starting Tuesday, South African Vice President Paul Mashatile said. Major emerging market powers are meeting in Johannesburg Aug. 22-24 for the Brics leaders summit. Brazil, Russia, India, China and South Africa will discuss enlarging the group and increasing local currency trade.
Key events this week:
- US existing home sales, Tuesday
- Chicago Fed’s Austan Goolsbee speaks, Tuesday
- Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
- UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
- US new home sales, S&P Global Manufacturing PMI, Wednesday
- US initial jobless claims, durable goods, Thursday
- Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
- Japan Tokyo CPI, Friday
- US University of Michigan consumer sentiment, Friday
- Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.9% as of 8:51 a.m. London time
- S&P 500 futures rose 0.3%
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index rose 1%
- The MSCI Emerging Markets Index rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.3% to $1.0930
- The Japanese yen rose 0.3% to 145.75 per dollar
- The offshore yuan was little changed at 7.2924 per dollar
- The British pound rose 0.3% to $1.2799
Cryptocurrencies
- Bitcoin was little changed at $26,092.69
- Ether fell 0.4% to $1,665.67
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.32%
- Germany’s 10-year yield declined three basis points to 2.67%
- Britain’s 10-year yield declined two basis points to 4.71%
Commodities
- Brent crude fell 0.4% to $84.16 a barrel
- Spot gold rose 0.3% to $1 901.49 an ounce
© 2023 Bloomberg
