Stocks Gain as Focus Turns to Fed, Yen Rebounds: Markets Wrap

(Bloomberg) — Stocks rallied as earnings optimism offset concern about higher-for-longer interest rates. The yen rebounded after dropping to its lowest in 34 years.

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Europe’s Stoxx 600 added 0.3%, with shares of Royal Philips NV surging 37% after reaching a lower-than-expected compensation settlement in the US. Contracts for the S&P 500 climbed 0.2%. Ten-year Treasury yields fell two basis points to 4.64%, while the dollar weakened.

Strong earnings for Microsoft Corp and Alphabet Inc. toward the end of last week helped lift US stocks to their best weekly gain in 2024 even after data highlighted sticky inflation in the world’s biggest economy. With earnings season in full flow, traders have the Federal Reserve’s policy meeting on their radar Wednesday.

“FOMC is bound to row back hard from its earlier predictions of meaningful policy easing this year,” Societe Generale economists including Klaus Baader wrote in a note to clients.

Meanwhile, the Japanese yen recovered after earlier falling past 160 per dollar. Thin liquidity due to a public holiday in the country was cited as a reason for the volatile moves. Top currency official Masato Kanda said “no comment for now” when asked by reporters whether or not he intervened.

In US markets, swaps traders now see only one Fed reduction for all of 2024, well below the roughly six quarter-point cuts they expected at the start of 2024. A gauge of US Treasury returns has slumped 2.3% this month, set for the biggest monthly drop since February last year, as hawkish Fedspeak and strong economic data pushed back rate-cut bets.

Read More: 60,000 Headlines Show Powell’s Hawkish Pivot Has Just Begun

The Hang Seng Index jumped more than 2% as Hong Kong’s benchmark equity index headed for a technical bull market after a surge in Chinese property shares added fresh impetus to this month’s rebound.

China’s central bank has advised some regional lenders to curtail their ultra-long bond investments to mitigate risks, people familiar with the matter said. The latest directive follows similar guidance to rural lenders earlier this month as the PBOC steps up efforts to cool the rally in long-term sovereign bonds.

Oil fell and gold edged lower as US Secretary of State Antony Blinken steps up efforts to secure a truce in Gaza in meetings in the Middle East on Monday, in what could be a final chance to persuade Israel to call off an attack on Rafah.

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Corporate Highlights:

• Elon Musk made an unannounced trip to China on Sunday. The surprise visit appears to have paid immediate dividends, with Tesla Inc. clearing two key hurdles to introduce its driver-assistance system to the world’s biggest auto market.

• L’Occitane International SA’s billionaire owner Reinold Geiger is close to making an offer to take the skin-care company private, according to people familiar with the matter.

• Royal Philips NV will book provisions of €982 million ($1.1 billion) as part of a planned settlement in the US to compensate claims following a recall of medical equipment that treats sleep apnea

• Embattled French IT services company Atos SE raised the amount of cash it is seeking to €1.7 billion ($1.8 billion) from €1.2 billion previously and wants to cut its debt further in an update to its rescue plan.

• Blackstone Inc. made a fresh offer for Hipgnosis Songs Fund Ltd., surpassing a previous bid from music investment firm Concord and intensifying a bidding war for the UK-listed company

Some key events this week:

• All four Chinese megabanks report first-quarter earnings, Monday

• Germany CPI, Monday

• Eurozone economic confidence, consumer confidence, Monday

• Australia retail sales, Tuesday

• China Caixin manufacturing PMI, non-manufacturing PMI, manufacturing PMI, Tuesday

• Japan unemployment, industrial production, retail sales, Tuesday

• Eurozone CPI, GDP, Tuesday

• Colombia rate decision, Tuesday

• Amazon earnings, Tuesday

• New Zealand unemployment, Wednesday

• UK S&P Global / CIPS Manufacturing PMI, Wednesday

• US rate decision, Wednesday

• Indonesia CPI, Thursday

• South Korea CPI, S&P Global Manufacturing PMI, Thursday

• Eurozone S&P Global Manufacturing PMI, Thursday

• Apple earnings, Thursday

• Eurozone unemployment, Friday

• Norway rate decision, Friday

• US unemployment, nonfarm payrolls, ISM Services, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 8:38 a.m. London time

• S&P 500 futures rose 0.2%

• Nasdaq 100 futures rose 0.3%

• Futures on the Dow Jones Industrial Average rose 0.2%

• The MSCI Asia Pacific Index rose 1.1%

• The MSCI Emerging Markets Index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%

• The euro rose 0.3% to $1.0723

• The Japanese yen rose 2.1% to 154.94 per dollar

• The offshore yuan rose 0.2% to 7.2562 per dollar

• The British pound rose 0.3% to $1.2531

Cryptocurrencies

• Bitcoin fell 2.2% to $62,275.4

• Ether fell 3.8% to $3,183.02

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.64%

• Germany’s 10-year yield declined two basis points to 2.56%

• Britain’s 10-year yield was little changed at 4.32%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

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