Thursday, November 21, 2024

Global Stock Rally Falters Ahead of US Jobs Data: Markets Wrap

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(Bloomberg) — A global equity rally faltered ahead of crucial US jobs data that could cement bets on when the Federal Reserve can start to ease monetary policy.

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Europe’s Stoxx 600 index retreated 0.4%, edging away from record peaks hit this week as the European Central Bank kicked off its policy easing cycle. While technology stocks gained, property and insurance stocks were among the worst laggards, given the ECB’s signal that it wouldn’t rush additional rate cuts. US futures flatlined, with modest premarket gains for the likes of Nvidia Corp. and Micron Technology Inc. while so-called meme stocks GameStop Corp. and AMC Entertainment Holdings Inc. extended their surge.

While traders were wary of placing big bets either way on Friday, global stocks are on track to snap a two-week losing stretch. Rate-cut expectations have escalated in the past week, encouraged by a slew of weaker-than-forecast US data, as well as easing by the Bank of Canada and ECB. A Bloomberg gauge of global government bonds posted its longest rising streak since November.

“All focus on the payrolls and the potential aftermath,” said Michael Brown, senior strategist at Pepperstone Group Ltd. “A number that’s bang in line with expectations will reaffirm where current market pricing is for Fed cuts and could give the market the fuel it needs to keep moving higher.”

Friday’s report is expected to show the US added 180,000 jobs in May, slightly more than in April, with the unemployment rate seen holding steady. Swap markets are pricing a full Fed rate cut by November, with a strong likelihood of one in September. Bond yields inched higher, while Bloomberg’s dollar gauge eased.

As rate-cut bets build, investors are pouring money into stocks, with US equity funds getting $4.6 billion in a seventh week of inflows, Bank of America said, citing EPFR Global data. However, BofA strategist Michael Hartnett warned a Fed rate cut may not be entirely good news, calling it the “first hint of trouble.” Chances of a hard landing could increase if the market grows more confident of lower borrowing costs, he added.

Among individual stock movers, Gamestop soared as much as 37% after a YouTube post said Keith Gill, whose Roaring Kitty online moniker has fueled a rally in shares of the video-game retailer, would return to the platform. The stock jumped about 47% on Thursday.

Key events this week:

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 fell 0.4% as of 10:36 a.m. London time

  • S&P 500 futures were unchanged

  • Nasdaq 100 futures rose 0.1%

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index rose 0.3%

  • The MSCI Emerging Markets Index rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0895

  • The Japanese yen rose 0.1% to 155.42 per dollar

  • The offshore yuan rose 0.1% to 7.2519 per dollar

  • The British pound was little changed at $1.2796

Cryptocurrencies

  • Bitcoin rose 0.6% to $71,122.65

  • Ether rose 0.2% to $3,807.91

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 4.30%

  • Germany’s 10-year yield advanced three basis points to 2.58%

  • Britain’s 10-year yield was little changed at 4.18%

Commodities

  • Brent crude fell 0.2% to $79.69 a barrel

  • Spot gold fell 1.5% to $2,341.58 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Divya Patil, Matthew Burgess and Alice Atkins.

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