Global stocks powered higher, as expectations of resilient US economic growth and solid company earnings pointed to another record high for Wall Street.
Nasdaq 100 Index futures rose 0.6% and S&P 500 contracts climbed 0.3%. Tesla Inc., Intel Corp. and PayPal Holdings Inc. advanced in pre-market trading. European bond markets rallied, shrinking the yield spread for Italian and German 10-year notes to the narrowest level since 2022. Oil steadied, with Brent holding above $78 a barrel.
US equity markets are shaking off a rocky start to the year amid conviction that the Federal Reserve will soon cut interest rates and bets that the artificial-intelligence boom is set to continue. Meanwhile, earnings season continues to get underway with companies including Netflix Inc., Tesla and Intel Corp. due to release results this week.
“The equity rally we are seeing is based on on the soft-landing scenario that’s being priced,” said Charles Diebel, head of fixed income at Mediolanum International Funds Ltd, adding this view has helped markets overcome their disappointment over central bankers dismissing swift interest rate cuts.
“If the economy does well, then why would you sell equities? And the counterfactual for equity markets is that if things do weaken, they will get rate cuts.”
While only 11% of the S&P 500’s market value has reported earnings so far, there are positive signs. About 85% of companies in the index have beat profit estimates, according to data compiled by Bloomberg.
Meanwhile, the rout in Chinese stocks intensified on Monday as investor pessimism deepened. The Hang Seng China Enterprises Index fell 2.4%, approaching a 2005 low. Chinese commercial lenders held their benchmark lending rates on Monday, disappointing investors hoping for more aggressive stimulus.
In European stocks, the biggest moves were driven by M&A. Swedish online gambling firm Kindred Group Plc jumped 19% after a $2.7 billion offer from La Francaise des Jeux SA. Payments firm Worldline SA rose Credit Agricole acquired a 7% stake to help stabilize its struggling payments partner.
Investor attention turns now to meetings at the Bank of Japan on Tuesday and the European Central Bank Thursday, with both institutions likely to leave their policy settings unchanged. The US fourth-quarter GDP report on Thursday could offer clues on the timing of the Fed’s first rate cut.
Oil prices were steady as OPEC member Libya restarted output at its largest field, bolstering global supplies and helping offset concerns that Red Sea shipping tensions will disrupt energy supply.
Key events this week:
- US Conference Board leading index, Monday
- Bank of Japan rate decision, Tuesday
- Eurozone consumer confidence, Tuesday
- Netflix Inc. to report earnings; the streaming service is set to post a strong finish to 2023, Tuesday
- Japan trade, Wednesday
- Eurozone S&P Global Services & Manufacturing PMI, Wednesday
- UK S&P Global / CIPS Manufacturing PMI, Wednesday
- US S&P Global Services & Manufacturing PMI, Wednesday
- Tesla Inc., International Business Machines Corp. (IBM) to report earnings, Wednesday
- European Central Bank rate decision, Thursday
- Germany IFO business climate, Thursday
- US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday
- LVMH, Northrop Grumman Corp., SK Hynix Inc. to report earnings, Thursday
- Japan Tokyo CPI, Friday
- Bank of Japan issues minutes of policy meeting, Friday
- US personal income & spending, Friday
- In China, the holiday rush starts ahead of next month’s Lunar New Year, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 7:29 a.m. New York time
- Nasdaq 100 futures rose 0.6%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0897
- The British pound rose 0.2% to $1.2729
- The Japanese yen rose 0.2% to 147.79 per dollar
Cryptocurrencies
- Bitcoin fell 2.5% to $40,716.95
- Ether fell 4.1% to $2,369.9
Bonds
- The yield on 10-year Treasuries declined three basis points to 4.09%
- Germany’s 10-year yield declined five basis points to 2.29%
- Britain’s 10-year yield declined four basis points to 3.88%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was a little changed
