Stocks, US Equity Futures Climb as Dollar Dips: Markets Wrap

(Bloomberg) -- European stocks and US equity futures rose, while the dollar weakened as investors scaled back bets on how aggressively the Federal Reserve will tighten policy. 

S&P 500 futures were up 0.7% and the Stoxx 600 added 0.7% as well. A gauge of Asian shares climbed 1.2%, boosted by a jump in Chinese technology firms. The Bloomberg Dollar Spot Index slipped 0.4%, extending a retreat from a record high. 

Commodities were broadly stronger. West Texas Intermediate crude traded near $99 a barrel, after US President Joe Biden’s trip to the Middle East ended without a firm commitment from Saudi Arabia to boost crude supplies. Wheat climbed after a five-day slump and copper rallied. 

Investors continue to be whipsawed by concerns over inflation and the potential for a US recession. Data last week showing a drop in long-term US inflation expectations eased some fears that elevated price pressures are becoming entrenched. Strong retail sales underscored a resilient economy despite monetary tightening.

While stocks are pricing in a recession, there are signs that “this is a market that wants to start bottom fishing,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said on Bloomberg Television. “People are starting to look for things that have been de-risked.”

Traders are back to expecting a 75 basis points July Fed rate hike, after last week flirting with the prospect of a 100 basis points move to hammer inflation.

Still, the outlook remains troubling for many investors. The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update as nations run out of options to tackle worsening risks.

Key events to watch this week:

• Earnings this week include Bank of America, Goldman Sachs, Tesla
• US Treasury Secretary Janet Yellen visits South Korea. Tuesday
• Reserve Bank of Australia releases July minutes. Tuesday
• UK Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey speak at event. Tuesday
• Bloomberg Crypto Summit in New York. Tuesday
• Bank of Japan, European Central Bank rate decisions. Thursday
• Nord Stream 1 pipeline scheduled to reopen following maintenance. Thursday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.7% as of 8:12 a.m. London time
• Futures on the S&P 500 rose 0.7%
• Futures on the Nasdaq 100 rose 0.8%
• The MSCI Asia Pacific Index rose 1.2%
• The MSCI Emerging Markets Index rose 1.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%
• The euro rose 0.5% to $1.0135
• The Japanese yen rose 0.2% to 138.24 per dollar
• The offshore yuan rose 0.1% to 6.7536 per dollar
• The British pound rose 0.6% to $1.1922

Bonds

• The yield on 10-year Treasuries advanced three basis points to 2.95%
• Germany’s 10-year yield advanced five basis points to 1.19%
• Britain’s 10-year yield advanced four basis points to 2.13%

Commodities

• Brent crude rose 2.4% to $103.54 a barrel
• Spot gold rose 0.4% to $1,715.82 an ounce

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