(Bloomberg) — European stock futures rose after gains in U.S. stocks on Friday amid optimism about eventual interest rate cuts from the Federal Reserve. Trading in Asia was weak, with a wide range of markets closed for the Lunar New Year.
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Euro Stoxx 50 futures show the benchmark index is poised to extend its advance after ending Friday with a third weekly gain. The S&P 500 closed above the 5,000 level last week for the first time amid a renewed rally in big technology companies.
Stocks in Australia, New Zealand, India and the Philippines drifted lower amid lack of indicators in the region. Asian markets closed on Monday include Japan, China, Hong Kong, Singapore, Taiwan, South Korea, Malaysia and Vietnam.
US futures were little changed as investors braced for US inflation numbers due on Tuesday that will help determine the path forward for the Federal Reserve.
Australian and New Zealand bonds fell, roughly mirroring declines in Treasuries on Friday that added two basis points to the 10-year yield. Trading in cash treasuries in Asia was closed due to the holiday in Japan.
The yen held near its lowest level in two months, which it reached on Friday after comments from central bankers that the Bank of Japan would take its time raising interest rates. The Japanese currency has weakened against all its G10 peers this year.
Bitcoin was little changed after earlier rising towards $49,000 – a level last seen in mid-January when a number of US exchange-traded funds began trading.
Annual U.S. inflation is expected to fall to 2.9% in January from 3.4% the previous month, according to estimates from economists polled by Bloomberg. This will be the first reading below 3% since March 2021.
“High inflation is rarely tamed without precipitating a recession,” Ed Yardeni, president of Yardeni Research, wrote in a research note. “The Fed has successfully steered inflation down towards its 2% target, while allowing the US economy to take flight, avoiding a hard landing.”
The S&P 500 rose 0.6% on Friday to set a new record, while the Nasdaq 100 jumped 1%. The gains were helped by technology stocks and positive fourth-quarter earnings. Four out of five companies that have reported results so far have beat expectations, brightening the outlook for corporate profits.
The advance in US stocks came despite traders retreating from their expectations for an easing Federal Reserve policy after relatively hawkish comments from central bankers and economic data showing no immediate need to cut interest rates.
Swaps market pricing shows that investors expect the chance of a Fed cut in March at 15%, down from 65% a month ago. Traders now expect four 25 basis point interest rate cuts in 2024, down from seven forecast at the end of last year.
In commodities, oil prices fell for the first time in six days after the Iranian Foreign Minister said that the war in Gaza may be closer to a “diplomatic solution.”
In Asia, data scheduled for release on Monday includes India's inflation and industrial production reports.
Main events this week:
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Consumer price index in India, Monday
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Minneapolis Fed President Neel Kashkari, Fed Governor Michel Bowman, and Fed Chairman Tom Barkin speak on Monday
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ECB Executive Board member Piero Cipollone and chief economist Philip Lane speak on Monday
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US Consumer Price Index, Tuesday
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Unemployment in the UK, Tuesday
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Producer prices in Japan, Tuesday
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UK inflation, Wednesday
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Eurozone GDP, industrial production, Wednesday
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Presidential elections in Indonesia, Wednesday
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Bank of England Governor Andrew Bailey speaks on Wednesday
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ECB Governing Council member Boris Vujčić and ECB Vice President Luis de Guindos speak
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Chicago Fed President Austin Goolsbee speaks on Wednesday
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Jobs australia thursday
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Japanese GDP, Thursday
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UK GDP, Thursday
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US Initial Jobless Claims, Retail Sales, Thursday
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Central Bank of the Philippines meeting on interest rates, Thursday
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European Central Bank President Christine Lagarde speaks on Thursday
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Federal Reserve Governor Christopher Waller speaks Thursday
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Bank of England policymakers Catherine Mann and Megan Green speak on Thursday
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US housing construction begins, producer prices, Friday
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San Francisco Fed President Mary Daly and Fed Vice Chairman for Supervision Michael Barr speak Friday
Some key movements in the markets:
Stores
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S&P 500 futures were little changed as of 1:39 PM Tokyo time
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Nasdaq 100 futures were little changed
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Australia's S&P/ASX 200 index fell 0.4%.
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Euro Stoxx 50 futures rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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There was little change in the euro at $1.0792
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There was little change in the Japanese yen at 149.22 to the dollar
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There was little change in the yuan in external transactions at 7.2236 to the dollar
Digital currencies
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Bitcoin was little changed at $48,135.58
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Ethereum fell 0.2% to $2,498.76
Bonds
Goods
This story was produced with assistance from Bloomberg Automation.
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