Stocks gain as traders assess prices, China supports: Markets wrap

(Bloomberg) — U.S. futures rose and European stocks gained as recent moves by China supported markets that offset uncertainty about the outlook for interest rates following cautious comments from central bankers in Jackson Hole.

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Nasdaq 100 contracts rose about 0.3% and S&P 500 futures rose 0.2%. Among individual premarket movers, 3M Co. after agreeing to pay $5.5 billion to settle lawsuits over military earplugs. Earned more than 5% profit. Two-year Treasury yields rose two basis points, adding to Friday’s gains. A level of the dollar remained steady.

The rate-sensitive tech sector led gains in Europe after Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde failed to shake up the outlook for interest rates in Jackson Hole on Friday. Trading volumes were two-thirds below the day’s 30-day average as UK markets closed for the bank holiday.

Powell stuck to the script in his Jackson Hole speech, saying the Fed is “ready to raise rates further if appropriate” even as he insisted the Fed would “proceed cautiously” guided by economic data. Lagarde, likewise, said the ECB would set borrowing costs higher to keep inflation under control but stopped short of signaling an increase at the next meeting.

“Not much has been said to change our outlook for U.S. stocks,” RBC Capital Markets strategist Lori Galvacina wrote in a note. “Equity investors are already wrapping their heads around the idea that rates may be high for a long time, the Fed’s job may not be done yet, and they’re data-driven. That message seemed to be reinforced on Friday.

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Asian benchmarks rose after Beijing eased a levy on stock trading among other measures. Chinese stocks pared their early gains, however, again showing that efforts to prop up its markets are faltering in the face of economic concerns. Foreign funds accelerated their selling throughout the day, poised to take this month’s outflows to record highs.

“China authorities are clearly stepping up efforts to rebuild confidence in Beijing’s policy commitment to achieve growth and support the market,” said Xiaojia Ji, Credit Agricole’s chief China economist. “But really changing the mindset requires a fundamental developmental improvement and concrete policy action, so more time may be needed.”

China Evergrande Group plunged as much as 87% in Hong Kong trade following a 17-month shutdown, becoming a penny stock as the country’s most indebted developer posted heavy losses and delayed meetings with creditors.

Elsewhere, oil and gold were little changed.

Highlights of this week:

  • American Conference Board Consumer Confidence, Tuesday

  • Eurozone Economic Confidence, Consumer Confidence, Wed

  • US GDP, Total Inventories, Pending Home Sales, Wednesday

  • China manufacturing PMI, non-manufacturing PMI, Thursday

  • Japan Industrial Production, Retail Sales, Thursday

  • Eurozone CPI, Unemployment, Thursday

  • The ECB will publish an account of the July monetary policy meeting on Thursday

  • US Personal Spending and Income, Initial Jobless Claims, Thursday

  • China Caixin Manufacturing PMI, Friday

  • Eurozone S&P Global Eurozone Manufacturing PMI, Friday

  • South African Central Bank Governor Lesetja Kaganyako, Atlanta Fed President Raphael Bostick, BOE’s Hu Bill, IMF’s Geeta Gopinath on the panel at the Reserve Bank of South Africa conference on Friday.

  • Boston Fed President Susan Collins speaks at a virtual event on Friday

  • US Unemployment, Nonfarm Payrolls, Light Vehicle Sales, ISM Manufacturing, Construction Spending, Fri

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Some key movements in the markets:

Shares

  • S&P 500 futures were up 0.2% at 7:25 a.m. New York time

  • Nasdaq 100 futures rose 0.3%

  • Futures for the Dow Jones industrial average rose 0.3%

  • The Stoxx Europe 600 rose 0.6%

  • The MSCI world index rose 0.3%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was up 0.1% at $1.0808

  • The British pound was little changed at $1.2586

  • The Japanese yen was little changed at 146.50 per dollar

Cryptocurrencies

  • Bitcoin fell 0.5% to $25,943.47

  • Ether fell 1.1% to $1,636.5

Bonds

  • The yield on 10-year Treasuries was little changed at 4.23%.

  • Germany’s 10-year yield was little changed at 2.57%

  • Britain’s 10-year yield rose two basis points to 4.44%

materials

  • West Texas Intermediate crude was down 0.2% at $79.64 a barrel.

  • Gold futures were up 0.1% at $1,941.90 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from John-Patrick Barnert, Farah ElBahravi, and Tasia Sibahudar.

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