(Bloomberg) — Stock and bond markets steadied after last week’s blockbuster rally, with traders still optimistic that US and European central banks may start cutting interest rates as soon as next year.
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Europe’s Stoxx 600 index held to recent gains and US futures added about 0.2%. Asian markets jumped, with South Korea’s Kospi finishing more than 5% higher after regulators banned short selling. The dollar fell for a fourth day. Crude futures rose more than 1% after Saudi Arabia and Russia reaffirmed they will stick with their supply curbs through year-end.
Global markets are finding firmer footing after recent US data pointed to a cooling economy, leading traders to price lower rates by June. More information about how policymakers see the trajectory of inflation may come later in week, with speeches due from Federal Reserve Chair Jerome Powell and Bank of England governor Andrew Bailey.
Read More: BlackRock’s Boivin Says High Rates Still a Threat to Stock Rally
“There’s a bit more reason for investors to be more optimistic that the Fed is probably done with rate hikes, but one should not let one’s guard down,” Vasu Menon, managing director for investment strategy for OCBC Bank Singapore, said on Bloomberg Television. “If the economy proves to be more resilient, if inflation proves to be more stubborn, bond yields could go up once again.”
Last week’s market bounce was more of a bear market rally than the start of a sustained upswing, particularly in light of weaker earnings revisions and macro data, according to Morgan Stanley’s Michael Wilson.
Among individual stock market movers, Ryanair Holdings Plc jumped 6.3% after announcing its first regular dividend. Tesla Inc. rose in pre-market trading after Reuters reported the company would produce a new, more affordable electric car model in Germany.
Key events this week:
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Eurozone services PMI, Monday
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Australia interest rate decision, Tuesday
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China trade data, Tuesday
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US trade balance, Tuesday
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Dallas Fed President Lorie Logan speaks, Tuesday
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Germany CPI, Wednesday
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Bank of England Governor Andrew Bailey speaks, Wednesday
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China PPI, CPI, Thursday
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US initial jobless claims, Thursday
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Fed Chair Jerome Powell speaks, Thursday
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US consumer confidence, Friday
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UK industrial production, GDP, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 was little changed as of 9:54 a.m. London time
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S&P 500 futures rose 0.1%
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Nasdaq 100 futures rose 0.2%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 2%
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The MSCI Emerging Markets Index rose 2.2%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.1% to $1.0746
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The Japanese yen fell 0.2% to 149.66 per dollar
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The offshore yuan rose 0.2% to 7.2758 per dollar
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The British pound rose 0.2% to $1.2408
Cryptocurrencies
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Bitcoin rose 1.2% to $35,091.31
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Ether rose 1% to $1,887.73
Bonds
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The yield on 10-year Treasuries advanced one basis point to 4.58%
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Germany’s 10-year yield advanced five basis points to 2.69%
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Britain’s 10-year yield advanced four basis points to 4.33%
Commodities
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Brent crude rose 1% to $86.08 a barrel
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Spot gold fell 0.3% to $1,986.61 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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