Stocks climbed after the debt-ceiling deal passed its last Congressional hurdle, with traders now looking to US jobs data later that may clarify the Federal Reserve’s policy path.
(Bloomberg) — Stocks climbed after the debt-ceiling deal passed its last Congressional hurdle, with traders now looking to US jobs data later that may clarify the Federal Reserve’s policy path.
The Stoxx Europe 600 index followed Asian benchmarks higher, with luxury-goods makers LVMH and Richemont among the leading gainers as a rally in Chinese stocks buoyed sentiment. Miners outperformed after industrial metals rebounded. Sportswear makers Puma SE and Adidas AG rose more than 4% each after Lululemon Athletica Inc.’s robust results. Dechra Pharmaceuticals Plc jumped after EQT AB made a firm offer for the UK veterinary drugmaker.
Futures on the S&P 500 and Nasdaq 100 edged higher after Thursday’s robust gains on Wall Street, with the tech-heavy Nasdaq set for a sixth straight weekly advance. The dollar dipped and the 10-year Treasury yield ticked higher.
Tech giants are still driving most of the stock market’s advance, with Apple Inc. nearing a record and Nvidia Corp. climbing more than 5% Thursday. The sector accounted for more than half the $14.8 billion of inflows into US equity funds last week, according to EPFR data. Aside from the obsession for anything AI-related that drove megacaps up 17% in May, the industry also got a boost amid a slide in bond yields and better-than-estimated sales at Dell Technologies Inc.
Traders are betting that the monthly US jobs report will show enough moderation in the pace of hiring to allow the Fed to pause its tightening cycle, helping sustain the rally. Dovish comments from Fed officials supported this view: Fed Bank of Philadelphia President Patrick Harker said “we should at least skip this meeting in terms of an increase,” and his St. Louis counterpart James Bullard said interest rates may already be sufficiently restrictive to bring down inflation.
A pause is not a done deal, however, leaving stocks at risk of a reverse should the jobs data surprise to the upside.
“We are really ripe for some type of pullback,” Erin Gibbs, senior partner and chief investment officer for Main Street Asset Management, said on Bloomberg TV. “There is a little cautiousness, a little uncertainty as we get a clearer idea of how the Fed will act.”
Shares in Japan, Australia, China advanced while South Korea’s Kospi index was headed for bull market territory following a gain of more than 20% from a low in September. Hong Kong’s Hang Seng index rose more than 3%, pulling the benchmark back from the brink of a bear market following concerns about Chinese growth.
Despite stronger-than-expected manufacturing figures Thursday, and the gains in Hong Kong equities Friday, investors remain cautious on the outlook for China.
“There was too much hype in the economic data and in Chinese equities starting at the end of November last year,” Daniel Lam, head of equity strategy for Standard Chartered Wealth Management, said on Bloomberg TV. “People have to be a bit patient. You have to wait for economic expectations to go lower.”
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.7% as of 9:16 a.m. London time
- S&P 500 futures rose 0.4%
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.4%
- The MSCI Asia Pacific Index rose 2%
- The MSCI Emerging Markets Index rose 2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was unchanged at $1.0762
- The Japanese yen fell 0.2% to 139.02 per dollar
- The offshore yuan rose 0.2% to 7.0879 per dollar
- The British pound was unchanged at $1.2526
Cryptocurrencies
- Bitcoin rose 0.9% to $27,097.71
- Ether rose 1% to $1,889.06
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.61%
- Germany’s 10-year yield advanced three basis points to 2.28%
- Britain’s 10-year yield advanced three basis points to 4.15%
Commodities
- Brent crude rose 1% to $75.04 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Thyagaraju Adinarayan and Richard Henderson.
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