(Bloomberg) — European stocks ticker higher as corporate earnings continued to deliver upside surprises while investors assessed remarks from central bankers that higher interest rates are needed to bring inflation under control.
The Stoxx 600 Index rose 0.2%, led by banks, as HSBC Holdings Plc delivered better-than-estimated profits.
S&P 500 contracts slipped following the best month for US stocks since November 2020, paring the annual loss in the underlying gauge to 13%.
The dollar fell, while Treasury yields inched higher but at about 2.67% the 10-year rate is well down from June’s peak near 3.50%.
The yen jumped for a fourth session versus the greenback. Oil retreated.
“It is fair to say that this earnings season has so far revealed pockets of corporates turning cautious but not a widespread move, and the market has put in one of the strongest rallies on record,” Deutsche Bank AG strategists including Binky Chadha wrote in in a report.
“With earnings weakness already widely expected, a more than typical rally was more likely than not in the absence of signs of widespread corporate risk aversion, especially given the large selloff and very low investor positioning coming in.”
The risk of a recession has cooled expectations for how sharply the Fed has to hike rates to tame inflation.
That spurred a July rebound in stocks and bonds. But market jumps that ease financial conditions can imperil the goal of curbing demand to contain the cost of living, adding pressure on the central bank.
Federal Reserve Bank of Minneapolis President Neel Kashkari said Sunday the US central bank is committed to reaching its long-term inflation goal of 2%.
Before that, Fed Bank of Atlanta President Raphael Bostic said the monetary authority has further to go in raising borrowing costs.
Investors are also monitoring US House Speaker Nancy Pelosi’s trip to Asia.
A statement from her office skipped any mention of a possible stopover in Taiwan. A visit may stoke US-China tension over the island.
What to watch this week:
- Airbnb, Alibaba and BP are among earnings reports
- PMIs from US and euro area, among others, Monday
- US construction spending, ISM manufacturing, Monday
- Reserve Bank of Australia rate decision, Tuesday
- US JOLTS job openings, Tuesday
- Chicago Fed President Charles Evans, St.
Louis Fed President James Bullard due to speak at separate events, Tuesday
- OPEC+ meeting on output, Wednesday
- US factory orders, durable goods, ISM services, Wednesday
- BOE rate decision, Thursday
- US initial jobless claims, trade, Thursday
- Cleveland Fed President Loretta Mester due to speak, Thursday
- US employment report for July, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 8:43 a.m.
London time
- Futures on the S&P 500 fell 0.2%
- Futures on the Nasdaq 100 were little changed
- Futures on the Dow Jones Industrial Average fell 0.2%
- The MSCI Asia Pacific Index rose 0.8%
- The MSCI Emerging Markets Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.1% to $1.0234
- The Japanese yen rose 0.7% to 132.39 per dollar
- The offshore yuan fell 0.1% to 6.7585 per dollar
- The British pound rose 0.2% to $1.2199
Bonds
- The yield on 10-year Treasuries advanced one basis point to 2.66%
- Germany’s 10-year yield advanced four basis points to 0.86%
- Britain’s 10-year yield advanced four basis points to 1.90%
Commodities
- Brent crude fell 0.6% to $103.39 a barrel
- Spot gold was little changed
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