European shares climbed, bolstered by record profits at Switzerland’s UBS Group AG and expectations central banks’ rate-tightening cycle may be nearing an end.
(Bloomberg) — European shares climbed, bolstered by record profits at Switzerland’s UBS Group AG and expectations central banks’ rate-tightening cycle may be nearing an end.
UBS Group’s more than 7% surge helped the Stoxx 600 benchmark trim its monthly retreat. The lender posted the biggest-ever quarterly profit for a bank as a result of its emergency takeover of Credit Suisse Group AG. Futures for the S&P 500 were little changed, while contracts on the Nasdaq retreated after the underlying index notched up four straight days of gains.
Markets are closing out the month with price-growth data and China’s weakening economy center stage.
European stocks pared their advance after inflation for the region stopped slowing in August, presenting European Central Bank officials with a quandary as they weigh the possibility of tighter policy against signs of flagging growth. The 10-year US Treasury yield, meanwhile, was near a three-week low after weaker-than-expected economic numbers on Wednesday supported predictions for the Fed to ease back on interest-rate hikes.
“The big market catalyst we’re looking for in September is the Fed meeting,” Hugh Gimber, global market strategist at JPMorgan Asset Management, said by phone. “Tomorrow’s payrolls data will be hugely relevant for that meeting. Without a slowdown in wages, a soft landing is impossible.”
US jobless numbers picked up slightly to 235,000 according to economists polled by Bloomberg ahead of initial claims data due Thursday. Friday’s non-farm payrolls are seen at 170,000 in August versus 187,000 in July, while hourly wage growth is predicted to slow slightly.
Equity benchmarks for mainland China and Hong Kong fell after manufacturing activity in China contracted again, albeit less than feared, while the services PMI showed slowing expansion. The offshore yuan and Australian dollar pared earlier gains against the greenback.
The latest signs of weakness in China were accompanied by further signs of official support. The People’s Bank of China met with lenders and private businesses to discuss improving their access to funding. Two of China’s biggest cities lowered mortgage requirements for some homebuyers following central government guidance, fanning expectations that more will follow suit to arrest a record housing slowdown.
“The problems China have now are deep-seated, structural ones,” said Rob Subbaraman, chief economist and head of global markets research for Nomura Singapore Limited, on Bloomberg Television. “It’s not clear to us that these piecemeal policy measures are really enough to revive the economy. We remain cautious.”
The S&P 500 is headed for the worst month since February, while the Nasdaq 100 is set for the largest decline this year. Asian and global stocks are also on pace for the biggest monthly losses since February.
Elsewhere, Brent crude oil advanced for a third day and gold climbed after a string of gains this week. Bitcoin was little changed above $27,000.
Key events this week:
- Eurozone CPI, unemployment, Thursday
- ECB publishes account of July monetary policy meeting, Thursday
- US personal spending and income, initial jobless claims, Thursday
- China Caixin manufacturing PMI, Friday
- Eurozone S&P Global Eurozone Manufacturing PMI, Friday
- South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
- Boston Fed President Susan Collins speaks at virtual event, Friday
- US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday
Some of the main moves in markets:
- The Stoxx Europe 600 rose 0.1% as of 10:37 a.m. London time
- S&P 500 futures were little changed
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index fell 0.5%
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.5% to $1.0872
- The Japanese yen rose 0.3% to 145.86 per dollar
- The offshore yuan was little changed at 7.2980 per dollar
- The British pound fell 0.3% to $1.2679
- Bitcoin fell 0.2% to $27,205.6
- Ether was little changed at $1,704.67
- The yield on 10-year Treasuries declined two basis points to 4.09%
- Germany’s 10-year yield declined five basis points to 2.49%
- Britain’s 10-year yield declined four basis points to 4.38%
- Brent crude rose 0.4% to $86.19 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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