(Bloomberg) — Stocks nudged higher Thursday as investors assessed the corporate profit outlook, while wagers on further Federal Reserve interest-rate hikes lifted Treasury yields.
Early gains in the Stoxx Europe 600 Index were led by retailers, leisure and technology firms, alongside an advance in shares of Chinese tech companies. US futures were little changed.
Equities are proving resilient to heightened bond market anxiety and an inverted Treasury yield curve flashing warnings on economic risks, as the S&P 500 climbs back toward the highest level in two months. But a global wave of monetary tightening risks upending those gains.
“There’s an intense tug-of-war happening in the economy and markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “On one side, you have a narrative that reasonable growth is going to support continued inflation pressure and keep the Fed hiking. The other narrative is that slowing growth is going to ease inflation and allow the Fed to stop hiking.”
The pound moved in a narrow range ahead of a Bank of England interest-rate decision that’s expected to deliver a half-point rate rise, despite growing risks of a recession.
Read more: BOE Weighs Historic Rate Rise and Recession Risk: Decision Guide
Treasuries slipped, taking the US 10-year yield to 2.73% as Fed officials indicated they were resolute on aggressive rate hikes to cool inflation. Oil hovered near $90 a barrel, hampered by demand worries. Gold advanced and Bitcoin oscillated near $23,000.
Among individual stock moves, Glencore Plc shares fell as much as 2% as its capital return plans overshadowed solid first-half results.
US-China tension remains among the uncertainties clouding the outlook. Taiwan braced for the Chinese military to start firing in exercises being held around the island in response to US House Speaker Nancy Pelosi’s visit.
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What to watch this week:
- 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 10:10 a.m. London time
- Futures on the S&P 500 were little changed
- Futures on the Nasdaq 100 fell 0.1%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index rose 0.4%
- The MSCI Emerging Markets Index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to $1.0189
- The Japanese yen fell 0.4% to 134.36 per dollar
- The offshore yuan was little changed at 6.7653 per dollar
- The British pound rose 0.1% to $1.2166
Bonds
- The yield on 10-year Treasuries advanced three basis points to 2.73%
- Germany’s 10-year yield was little changed at 0.88%
- Britain’s 10-year yield advanced two basis points to 1.93%
Commodities
- Brent crude was little changed
- Spot gold rose 0.8% to $1,778.59 an ounce
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