(Bloomberg) — Global stocks hit a record high as traders became increasingly confident that the Federal Reserve is on track to deliver its first interest rate cuts in more than four years.
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MSCI’s All Country World Index rose as much as 0.1%, trading near its all-time record close on July 16. Europe’s Stoxx 600 index advanced 0.5% after Deutsche Bank AG forecast encouraging third-quarter results. Futures on the S&P 500 rose 0.2%.
Growing expectations for U.S. rate cuts erased market declines in early August, fueled by recession fears in the U.S. and a rapid easing of yen carry trades. Now, investors are turning their attention to Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Forum on Friday for further evidence of the impending September cut.
Traders have returned to 100 basis points for easing this year after wage revisions and the Fed minutes later strengthened the case for lower rates. After four days of declines, the yield on 10-year Treasuries rose two basis points to 3.82% on Thursday. The dollar trades flat.
“We’ve been long Treasuries for a week now — it’s been quiet and yields could go down from here,” said Matt Amis, investment director at Abrdn Investment Management Ltd. “Jackson Hole is obviously waiting for all the market. Powell is desperate to cut, and we don’t know why he wants to push back the current market price for September.
In Europe, data showed a mixed picture for the region’s economy, despite a surprise boost from the Paris Olympics.
French services expanded at the fastest pace in more than two years, while a composite PMI in Germany added to evidence that the country’s recovery is faltering. Britain’s private sector firms posted their strongest growth in four months with cooling price pressures.
Meanwhile, Bank of Japan Governor Kazuo Ueda faces intense market scrutiny when he addresses lawmakers on Friday after the central bank’s hawkish signals contributed to global market turmoil earlier this month.
On corporate news, shares of Deutsche Bank rose more than 3%. The lender said it expects a €430 million ($479 million) boost to pre-tax profit in the third quarter after reaching settlements with more than 80 plaintiffs in a long-running dispute.
Highlights of this week:
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The ECB publishes an account of the July rate decision on Thursday
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US Initial Jobless Claims, Existing Home Sales, S&P Global PMI, Thursday
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Japan CBI, Friday
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BOJ’s Kazuo Ueda to attend special session of Japan’s parliament to discuss July hike, Friday
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US new home sales, Friday
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Jerome Powell speaks in Jackson Hole on Friday
Some key movements in the markets:
Shares
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S&P 500 futures were up 0.2% at 7:32 a.m. New York time
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Nasdaq 100 futures rose 0.3%
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The future of the Dow Jones Industrial Average was little changed
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The Stoxx Europe 600 rose 0.5%
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The MSCI World Index was little changed
Coins
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.1% to $1.1134
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The British pound was up 0.1% at $1.3109
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The Japanese yen fell 0.6% to 146.04 per dollar
Cryptocurrencies
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Bitcoin was little changed at $61,221.39
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Ether rose 0.2% to $2,636.9
Bonds
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The yield on 10-year Treasuries rose three basis points to 3.83%
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Germany’s 10-year yield rose four basis points to 2.23%
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Britain’s 10-year yield rose four basis points to 3.93%
materials
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West Texas Intermediate crude was up 0.5% at $72.32 a barrel.
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Spot gold was down 0.4% at $2,502.94 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Winnie Hsu, Mia Glass, Abhishek Vishnoi, David Ingles, Yvonne Mann and Chiranjeevi Chakraborty.
(An earlier version of the story corrected the day Ueda met with lawmakers.)
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