(Bloomberg) — Stocks in Europe rose Tuesday along with US equity futures as risk appetite returned to markets roiled in recent weeks by concerns about global economic growth, surging prices and policy tightening. Treasury yields rose and the dollar retreated.
Technology stocks led a broad-based advance of the Stoxx Europe 600 following a rally in Chinese tech shares on optimism Beijing may ease up on a yearlong clampdown. Equities were also buoyed by data showing the euro-area economy expanded more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine.
Contracts on the S&P 500 bounced back after a Wall Street drop, while futures on the tech-heavy Nasdaq 100 jumped more than 2%. Citigroup Inc. rose 4.5% in premarket trading Warren Buffett’s Berkshire Hathaway took a stake in the lender. Tech names including Advanced Micro Devices Inc. Tesla Inc. and Qualcomm Inc. were among the biggest pre-market gainers.
A challenging global economic outlook amid elevated food and fuel costs and tightening monetary settings continues to shape sentiment, although one bond-market measure — the five-year breakeven rate — is signaling inflation may have peaked. Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high.
“All-in-all, the price action is suggestive of a market that can’t decide what it wants to do,” said Jeffrey Halley, a market analyst at Oanda. “Concerns around recessions make me feel that a decent correction lower from the dollar and US yields is increasingly likely. I’m still not sure it provides markets with a reason to turn long once again on equities.”
Bond yields across Europe rose, with the 10-year U.K. rate climbing as much as 10 basis points as traders added tightening bets after strong jobs data. The pound strengthened more than 1% to a two-week high against the dollar.
An Asian share index rose for a third day — its longest winning streak since mid-March — amid a jump in some technology firms and as investors assessed China’s efforts to stamp out Covid. A meeting Tuesday between the nation’s top regulators and corporate giants raised hopes the battered tech sector is near a turning point.
Meanwhile, Shanghai reported three days of zero community transmission, a milestone that could lead officials to start unwinding a punishing lockdown. Flareups elsewhere in China showed how hard it is to tackle the omicron strain.
Cryptocurrencies weathered the latest stablecoin turbulence, with Bitcoin rising above the $30,000 mark.
New York Fed President John Williams on Monday downplayed deteriorating liquidity conditions in financial markets, saying it was to be expected as investors grapple with uncertainty over global events and shifting U.S. monetary policy. Fed speakers including Chair Jerome Powell are due to speak later Tuesday.
What damage will be done to the US economy and global markets before the Fed changes tack and eases policy again? The “Fed Put” is the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.
What to watch this week:
- Fed Chair Jerome Powell among slate of Fed speakers Tuesday
- Reserve Bank of Australia releases minutes of its May policy meeting Tuesday
- G-7 finance ministers and central bankers meeting Wednesday
- Eurozone, UK CPI Wednesday
- Philadelphia Fed President Patrick Harker speaks Wednesday
- China loan prime rates Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 1.7% as of 10:52 a.m. London time
- Futures on the S&P 500 rose 1.7%
- Futures on the Nasdaq 100 rose 2.2%
- Futures on the Dow Jones Industrial Average rose 1.2%
- The MSCI Asia Pacific Index rose 1.5%
- The MSCI Emerging Markets Index rose 2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.3% to $1.0470
- The Japanese yen fell 0.2% to 129.36 per dollar
- The offshore yuan rose 0.5% to 6.7648 per dollar
- The British pound rose 1% to $1.2445
Bonds
- The yield on 10-year Treasuries advanced three basis points to 2.91%
- Germany’s 10-year yield advanced five basis points to 0.99%
- Britain’s 10-year yield advanced seven basis points to 1.80%
Commodities
- Brent crude rose 0.6% to $114.96 a barrel
- Spot gold rose 0.2% to $1,827.09 an ounce
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