Stocks Rise Amid Powell Countdown, China Stimulus: Markets Wrap

(Bloomberg) — Stocks rose Thursday as China’s stimulus and better-than-expected data from Germany settled some nerves in the anxious wait for a keynote speech by Federal Reserve Chairman Jerome Powell. Bond yields and the dollar index fell.

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Energy shares were among the biggest gainers in Europe, while U.S. futures rose after positive closes for the S&P 500 and Nasdaq 100. Hong Kong shares rose after a delayed start to trading there due to a storm.

Sentiment was boosted after China stepped up stimulus measures with an additional 1 trillion yuan ($146 billion) in measures and Germany’s economy proved more resilient than initially thought in the second quarter. However, traders expect markets to remain volatile as they await Powell’s comments at the Jackson Hole meeting on Friday for clues on the pace of US monetary policy tightening.

Crude oil added to a rally that could fuel renewed concern about whether price pressures have peaked. Natural gas prices have soared to new highs, intensifying an energy crisis that threatens the eurozone economy and therefore the global outlook.

Fed officials ahead of Jackson Hole were clear that they see more monetary tightening ahead, a message that is eroding the rally in stocks and bonds since mid-June. The tension in the markets is whether these assets will continue to return to the lows of the year.

“The market is really trying to justify the bear market rally and it’s looking for that ignominious pivot from the Fed and it’s unlikely to get that,” Mehvish Ayub, senior investment strategist at State Street Global Advisors, said on Bloomberg Television. “We have to continue to expect that volatility, not just before Jackson Hole, before any kind of narrative from Fed officials.”

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What to watch this week:

  • US GDP, initial jobless claims, Thursday

  • The Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, on Thursday

  • Minutes of the ECB July, Thursday

  • Fed Chairman Powell speaks in Jackson Hole on Friday

  • US Personal Income, PCE Deflator, University of Michigan Consumer Sentiment, Friday

Some of the main movements in the markets:

inventories

  • The Stoxx Europe 600 was up 0.7 percent at 8:30 a.m. London time

  • S&P 500 futures rose 0.9%

  • Nasdaq 100 futures rose 1%

  • Dow Jones Industrial Average futures rose 0.7%

  • The MSCI Asia Pacific Index fell 0.5%

  • The MSCI Emerging Markets Index fell 0.4%

currency

  • The Bloomberg Dollar Spot Index fell 0.4%

  • The euro rose 0.5% to $1.0015

  • The Japanese yen rose 0.5% to 136.46 per dollar

  • The offshore yuan was up 0.4% at 6.8525 per dollar

  • The British pound rose 0.5% to $1.1858

Bindings

  • The 10-year bond yield fell two basis points to 3.08%

  • Germany’s 10-year yield fell two basis points to 1.35%

  • Britain’s 10-year yield fell five basis points to 2.64%

Goods

  • Brent crude rose 0.6% to $101.79 a barrel

  • Spot gold rose 0.7% to $1,763.35 an ounce

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