Stocks Rally With Asia as China Pledges Fiscal Aid: Markets Wrap

By Investor Empires On Sep 26, 2024

(Bloomberg) — European stocks and U.S. stock futures rose, tracking gains in Asia after China pledged fiscal stimulus, and technology shares rose.

Most Read from Bloomberg

Europe’s Stoxx 600 index rose 1% and Nasdaq 100 futures advanced after a strong revenue outlook from Micron Technology Inc. sent the stock higher in late trade. Asian stocks rose about 2%. U.S. Treasuries and the dollar were steady.

While there were no details on the scale of planned fiscal spending in China, the announcement increased risk appetite and boosted the outlook for industries in Europe most exposed to its economy. Some analysts had questioned whether the monetary stimulus unveiled earlier in the week would be enough amid concerns about deflation and weak consumption.

“Does this change the global story? We’re not sure, but for now it’s certainly a good thing for the rest of the world,” said Kenneth Brooks, a strategist at Societe Generale. “Individual stock names in Europe have been rising as people are betting that the Chinese consumer will go out and spend, including on luxury goods.”

Among the steps China plans to take is injecting up to 1 trillion yuan ($142 billion) of capital into its biggest state-owned banks to boost their ability to support the struggling economy, Bloomberg reported on Thursday, citing people familiar with the matter. It would be the first time since the 2008 global financial crisis that Beijing has injected capital into its major banks.

Powell speaks

Meanwhile, S&P 500 futures rose 0.7% as traders awaited a pre-recorded speech by Federal Reserve Chairman Jerome Powell at the 10th annual U.S. Treasury Market Conference.

Federal Reserve Governor Adriana Kogler said on Wednesday that she “strongly supports” the U.S. central bank’s interest rate cut last week, adding that additional rate cuts would be appropriate if inflation continues to decline as expected.

At the end of the week, the Fed’s preferred gauge of prices and the picture of consumer demand are expected to confirm last week’s aggressive rate cuts and Powell’s view that the economy remains strong.

In commodities, oil prices fell for a second day on news that Saudi Arabia is considering increasing its production, and factions in Libya reached an agreement that opens the way for the return of some crude production.

Separately, the United States, the European Union and major Middle East powers including Saudi Arabia and Qatar have proposed a three-week ceasefire between Israel and Hezbollah in Lebanon, as part of an effort to pave the way for negotiations and avoid a full-scale war in the region.

Main events this week:

European Central Bank President Christine Lagarde speaks Thursday
U.S. Jobless Claims, Durable Goods, Revised GDP, Thursday
Federal Reserve Chairman Jerome Powell delivers pre-recorded remarks at the 10th Annual U.S. Treasury Market Conference, Thursday.
China’s industrial profits, Friday
Eurozone Consumer Confidence, Friday
U.S. Personal Spending Index, University of Michigan Consumer Confidence Index, Friday

Some key movements in the markets:

Stocks

The Stoxx Europe 600 index was up 1.1% by 8:20 a.m. London time.
S&P 500 futures rose 0.8%.
Nasdaq 100 futures rose 1.4%.
Dow Jones Industrial Average futures rose 0.4%.
MSCI Asia Pacific Index rose 2.1%
The MSCI Emerging Markets Index rose 1.8%.

Currencies

The Bloomberg Dollar Index fell 0.2%.
The euro rose 0.2% to $1.1156.
The Japanese yen fell 0.2% to 144.97 yen per dollar.
The offshore yuan rose 0.3% to 7.0112 per dollar.
The pound rose 0.2% to $1.3356.

Cryptocurrencies

Bitcoin rose 0.5% to $63,810.38
Ether price rose 1.5% to $2,619.81

Bonds

The yield on the 10-year US Treasury note fell one basis point to 3.78%.
The yield on the 10-year German bond was little changed at 2.17%.
The yield on the 10-year UK bond was little changed at 3.98%.

Goods

Brent crude fell 2.4% to $71.67 a barrel.
Spot gold rose 0.1 percent to $2,660.44 an ounce.

This story was produced with the help of Bloomberg Automation.

–With assistance from Winnie Hsu, Divya Patel, and Richard Henderson.