(Bloomberg) — US equity futures pushed higher Friday along with stocks in Europe after China’s latest measure to bolster its economy injected a note of optimism at the end of another volatile week for global markets.
Futures on the S&P 500 and Nasdaq 100 rose more than 1%, shrugging off modest losses on Wall Street on Thursday. Treasury yields edged higher, and the dollar was steady after its biggest one-day drop since 2020. Oil held above $111 a barrel.
The Stoxx Europe 600 index added 1.5%, erasing the week’s losses. Carmakers led the advance, rebounding after two days of declines. Basic resources outperformed as industrial metals rallied. Consumer products was the only sector in the red as Richemont slumped after the Swiss watch and jewelry maker forecast rocky times ahead.
Chinese lenders lowered the five-year loan prime rate by a record amount in an effort to boost mortgages and loans amid a property slump and Covid lockdowns. The move “is without doubt a positive in terms of raising the market’s sentiment,” said Niu Chunbao, a fund manager at Shanghai Wanji Asset Management.
Rebounds in risk sentiment have tended to fizzle this year. Investors continue to grapple with concerns about an economic downturn, in part as the Federal Reserve hikes interest rates to quell price pressures. Global shares are on course for an historic seventh week of declines.
“The risk-on trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China,” said Pierre Veyret, an analyst at ActivTrades. “This move significantly contrasts with the lingering inflation and recession risks in Western economies, where an increasing number of market operators and analysts are questioning the policies of central banks.”
Traders in the US will be bracing for more volatility later Friday due to the monthly expiration of options tied to equities and exchange-traded funds. The process is notorious for stirring up market swings.
The UK’s stock benchmark outperformed and the pound gained after a surprise increase in April retail sales outweighed a decline in consumer confidence to the lowest level in at least 48 years.
In the latest developments over Russia’s war in Ukraine, the Senate passed a more than $40 billion Ukraine aid package, sending the bill to President Joe Biden for his signature. Meanwhile, the Group of Seven industrialized nations will agree on more than 18 billion euros ($19 billion) in aid for Ukraine, according to German Finance Minister Christian Lindner.
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Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 1.1% as of 5:56 a.m. New York time
- Futures on the Nasdaq 100 rose 1.5%
- Futures on the Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 rose 1.5%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0590
- The British pound rose 0.1% to $1.2480
- The Japanese yen fell 0.3% to 128.15 per dollar
Bonds
- The yield on 10-year Treasuries advanced three basis points to 2.86%
- Germany’s 10-year yield advanced four basis points to 0.99%
- Britain’s 10-year yield advanced five basis points to 1.91%
Commodities
- West Texas Intermediate crude fell 0.2% to $111.94 a barrel
- Gold futures rose 0.1% to $1,850.50 an ounce
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