U.S. stock futures climbed on Friday and the euro was lifted by a rise in European bond yields, after Asian shares dropped as a lack of details about Chinese stimulus disappointed investors.
Futures for the U.S. S&P 500 rose 0.37%, after the index dipped on Thursday. The S&P hit a record high on Dec. 6 on optimism about the second Trump presidency, which looks set to focus on deregulation and tax cuts.
Europe’s STOXX 600 equity index fell 0.29% after slipping slightly the previous day.
Britain’s FTSE 100 was flat and France’s CAC 40 was up 0.13%, barely budging after President Emmanuel Macron named Francois Bayrou as his fourth prime minister of 2024.
Markets are still confident about a rate cut from the Federal Reserve next week. Data on U.S. producer prices came out a little hotter than expected in November due to a 50% jump in egg prices.
“In my opinion, there’s enough concern on inflation not to cut next week, but the Fed doesn’t like to provide big surprises to markets this close to the event,” said Jim Reid at Deutsche Bank.
However, futures imply little chance of a move in January, with just two more easings priced in to 3.8% by end-2025.
Both China’s blue chip stocks and Hong Kong’s Hang Seng lost more than 2% after the Central Economic Work Conference (CEWC) did not offer details on new stimulus measures.
Top policymakers in Beijing pledged to increase debt and lift consumption but failed to boost Chinese equities.
Authorities are girding for more trade tensions with the U.S. as Donald Trump’s return to power approaches, dampening growth expectations and helping push Chinese bond yields to their biggest weekly fall since April 2018, at 18 basis points . Bond yields move inversely to prices.
Jian Chang, chief China economist at Barclays, said the CEWC likely disappointed markets, as a Dec. 9 Politburo statement had raised hopes of more aggressive easing.
“We maintain our view that incremental and reactive policy is more likely than pre-emptive and ‘bazooka’ policy,” she said.
CURRENCY SWINGS
The euro climbed 0.45% on Friday to $1.0514, clawing back some of its recent losses as European bond yields rose compared to those in the U.S. in the wake of the European Central Bank’s rate cut on Thursday.
The euro remained down around 0.5% for the week, however. Rate reductions from Switzerland, Canada and the ECB this week have burnished the appeal of relatively higher U.S. interest rates and have boosted the dollar.
The dollar index was down 0.16% on Friday at 106.8 but has risen around 0.8% across the week.
The 10-year benchmark bond yield has risen 17 bps this week while 30-year yields surged 22 bps, the biggest weekly rise in more than a year.
The Indonesian rupiah hit a four-month low on Friday and the central bank had to intervene repeatedly to shore it up. India’s central bank was seen selling dollars via state banks to support the rupee, which is near record lows.
The dollar was up 0.5% against the Japanese yen at 153.45 yen. It has risen around 2.2% this week as markets scaled back the chance of a rate hike from the Bank of Japan next week to just 22%. Sources said the BOJ is leaning towards keeping rates steady.
Oil prices ticked higher on Friday but were set for a weekly gain of around 3%. Gold gained 1.5% this week to $2,673 per ounce, still some distance from its record of $2,790.
(Reporting by Harry Robertson in London abd Stella Qiu in Sydney; Editing by Edwina Gibbs, Sam Holmes, Gareth Jones, William Maclean)
