(Bloomberg) — Stocks in Europe and US equity futures pushed higher Friday after China’s latest measure to bolster its economy injected a note of optimism at the end of another volatile week for global markets.
The Stoxx Europe 600 index added more than 1% at the open. Basic resources led the advance as industrial metals rallied. Consumer products were the only sector in the red as luxury-goods business Richemont slumped after an earnings miss. Shares rose in Japan, Hong Kong and China, while US futures gained about 1%, shrugging off modest losses on Wall Street on Thursday.
Treasury yields rose along with yields on European bonds, and the dollar held its biggest one-day drop since 2020. Oil was steady near $111 a barrel.
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 “comes as a big surprise, and 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.
“Inflationary pressures look very much persistent at the moment,” Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television. “The biggest risk right now is developed-market central banks might trigger a recession. We are increasingly suspecting that they made a policy mistake.”
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.
UK consumer confidence fell to its lowest level in at least 48 years after surge in the cost-of-living left people more gloomy than at the depths of the 1970s energy crisis. That may give the Bank of England reason to move carefully in raising rates further. The U.K. stock benchmark climbed 1.4%, while the pound was steady and gilts yields rose.
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.
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.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 1% as of 8:23 a.m. London time
- Futures on the S&P 500 rose 0.8%
- Futures on the Nasdaq 100 rose 1.2%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The MSCI Asia Pacific Index rose 1.5%
- The MSCI Emerging Markets Index rose 1.9%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $1.0566
- The Japanese yen fell 0.1% to 127.97 per dollar
- The offshore yuan rose 0.6% to 6.6823 per dollar
- The British pound was little changed at $1.2468
Bonds
- The yield on 10-year Treasuries advanced three basis points to 2.86%
- Germany’s 10-year yield advanced three basis points to 0.98%
- Britain’s 10-year yield advanced three basis points to 1.90%
Commodities
- Brent crude fell 0.3% to $111.65 a barrel
- Spot gold rose 0.3% to $1,846.48 an ounce
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