European Stocks Push Higher on Coattails of S&P: Markets Wrap

(Bloomberg) — European stocks edged up after the S&P 500 closed at a new record high Friday amid optimism over eventual Federal Reserve interest-rate cuts and as investors look forward to a crucial update on US inflation.

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Rates-sensitive real estate stocks led broad gains across almost every industry group in Europe. Shares in Italian luxury brand Tod SpA shares rose as much as 18% after the founding family said it had enlisted buyout firm L Catterton in a new attempt to take the company private.

US equity futures clung to narrow ranges after the S&P 500 closed above 5,000 for the first time on Friday, driven by a renewed rally in big tech companies. Treasuries and the dollar were steady after wrapping up a sixth week of gains, the longest winning streak since early September.

Tuesday’s inflation report is the key event of the week for markets as traders look for clues on the timing of a first Fed rate cut. The annual US inflation rate is forecast to have dropped to 2.9% in January from 3.4% the prior month, according to consensus estimates of economists surveyed by Bloomberg. That would be the first reading below 3% since March 2021.

“The January CPI numbers are expected to be softening compared to December, but with Fed officials sticking to a cautious script lately, it is hard to think this week’s CPI will change the recent messaging,” said Paul Mackel, the head of global FX research at HSBC Bank Plc. “One would think that many within the Fed would be in favor of a strong dollar to help the disinflation process.”

Swaps markets suggest the Fed will carry out just four rate cuts in 2024, down from seven forecast at the end of last year, and only slightly more than the three penciled in by policymakers.

“Market pricing is trying to encourage central banks to get going and start cutting rates. Arguably, the market has been overexuberant in its encouragement recently,” Iain Stealey, international chief investment officer for fixed income at J.P. Morgan Asset Management, wrote in a note to clients. “Employment has remained strong, purchasing managers’ surveys are healthy and economic growth is robust.”

In Asia Monday, trading levels were muted with a swath of markets shut for Lunar New Year holidays. Equities in Australia, New Zealand, India and the Philippines drifted lower amid a lack of leads in the region. Markets including Japan, China, Hong Kong, Singapore, Taiwan and South Korea were all closed.

The yen held near a two-month low reached on Friday following comments from central bankers that the Bank of Japan will take its time raising rates. Japan’s currency has weakened against all its Group-of-10 peers this year.

In commodities, oil prices fell following last week’s advance Iran’s foreign minister said the war in Gaza may be moving closer to a diplomatic solution.

Key events this week:

  • India CPI, Monday

  • Minneapolis Fed President Neel Kashkari, Fed Governor Michelle Bowman, Fed President Tom Barkin speak, Monday

  • ECB executive board member Piero Cipollone, chief economist Philip Lane speak, Monday

  • US CPI, Tuesday

  • UK unemployment, Tuesday

  • Japan producer prices, Tuesday

  • UK inflation, Wednesday

  • Eurozone GDP, industrial production, Wednesday

  • Indonesia presidential election, Wednesday

  • Bank of England Governor Andrew Bailey speaks, Wednesday

  • ECB governing council member Boris Vujcic and vice president Luis de Guindos speak

  • Chicago Fed President Austan Goolsbee speaks, Wednesday

  • Australia jobs, Thursday

  • Japan GDP, Thursday

  • UK GDP, Thursday

  • US initial jobless claims, retail sales, Thursday

  • Philippine central bank meeting on interest rates, Thursday

  • ECB President Christine Lagarde speaks, Thursday

  • Fed Governor Christopher Waller speaks, Thursday

  • Bank of England policy makers Catherine Mann, Megan Green speak, Thursday

  • US housing starts, producer prices, Friday

  • San Francisco Fed President Mary Daly, Fed Vice Chair for Supervision Michael Barr speak, Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 rose 0.3% as of 9:03 a.m. London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • The MSCI Asia Pacific Index was little changed

  • The MSCI Emerging Markets Index was little changed


  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0775

  • The Japanese yen was little changed at 149.16 per dollar

  • The offshore yuan was little changed at 7.2173 per dollar

  • The British pound was little changed at $1.2624


  • Bitcoin was little changed at $48,107.27

  • Ether fell 0.6% to $2,489.03


  • The yield on 10-year Treasuries was little changed at 4.18%

  • Germany’s 10-year yield declined one basis point to 2.37%

  • Britain’s 10-year yield declined one basis point to 4.08%


This story was produced with the assistance of Bloomberg Automation.

–With assistance from Robert Brand and Sagarika Jaisinghani.

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