Equities rally continues ahead of Fed speeches

Stocks rallied on earnings optimism and US data that supported the case for interest-rate cuts. A raft of Federal Reserve speakers are slated for Friday as traders await a key US inflation print next week.  

The Stoxx 600 advanced 0.6%, poised for its best weekly gain in more than three months. Contracts on the S&P 500 rose 0.2% after the index closed less than 1% away from its all-time high. Treasuries and the dollar were flat, while the pound edged higher after data showed the UK economy bouncing back from a shallow recession.

The rebound in stocks got a fresh driver on Thursday as higher-than-expected applications for US unemployment benefits supported the case for rate cuts. Traders will be watching for hints on the timing of policy easing from Fed officials including Michelle Bowman and Neel Kashkari before next week’s CPI data. 

Earnings growth and even a small decline in US interest rates this year could push stocks to fresh records, said Daniel Yoo, head of global asset allocation for Yuanta Securities Korea, on Bloomberg Television. “There’s quite a bit of upside left for major Big Tech as well as the S&P 500.”

In Asia, the Hang Seng advanced following news that regulators were considering a proposal to exempt individual investors from paying taxes on dividends earned from Hong Kong stocks bought via Stock Connect. Onshore Chinese stocks fluctuated as investors assessed a report saying US President Joe Biden’s administration is poised to unveil a sweeping decision on China tariffs as soon as next week. 

Oil extended gains into a third day as key technical levels provided a floor for losses. Gold rose after jumping more than 1% on Thursday.

Key events this week:

• ECB publishes account of April policy meeting, Friday
• US University of Michigan consumer sentiment, Friday
• Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.6% as of 8:31 a.m. London time
• S&P 500 futures rose 0.2%
• Nasdaq 100 futures rose 0.2%
• Futures on the Dow Jones Industrial Average rose 0.2%
• The MSCI Asia Pacific Index rose 0.7%
• The MSCI Emerging Markets Index rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0781
• The Japanese yen fell 0.2% to 155.74 per dollar
• The offshore yuan was little changed at 7.2280 per dollar
• The British pound rose 0.1% to $1.2537

Cryptocurrencies

• Bitcoin rose 1% to $63,260.01
• Ether rose 0.8% to $3,045.57

Bonds

• The yield on 10-year Treasuries was little changed at 4.45%
• Germany’s 10-year yield declined two basis points to 2.47%
• Britain’s 10-year yield declined two basis points to 4.12%

Commodities

• Brent crude rose 0.5% to $84.33 a barrel
• Spot gold rose 0.9% to $2,367.70 an ounce

This story was produced with the assistance of Bloomberg Automation.

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