European Stocks Rise, US Futures Decline Amid Value Chase: Market Watch

(Bloomberg) — European stocks rose while futures for US indices and Asian equities fell as investors hunted for securities amid hawkish central bank action, disappointing earnings and further consolidation of power in China.

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The dollar rose ahead of the release of the Federal Reserve’s preferred inflation rate. The Stoxx Europe 600 rose for the second day in a row. Contracts for the S&P 500 and Nasdaq 100 sank by at least 0.2% each. Chinese tech stocks led the sell-off in Asia amid signs that price wars and cash shortages are hurting profits. The yen fell after a candidate for the top job at the Bank of Japan signaled a continuation of loose monetary policy.

Traders are grappling with a challenging investment landscape in an era of monetary tightening. Risks from central banks’ continued fight against inflation are exacerbated by slower growth and corporate performance, rising geopolitical tensions from Russia to North Korea, and regulatory restrictions in China.

“Rising tensions are certainly increasing safe-haven inflows into U.S. Treasuries and hampering the Fed’s hawkish pricing,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, wrote in a note.

The European Stoxx 600 rose for a second day in a row, nearly offsetting its weekly losses as investors continued to favor the region known for its value stocks over the US or China, where growth stocks dominate. Energy and construction companies were the top industry groups in the index.

An indicator of Chinese technology stocks listed in Hong Kong fell 3.3%. Shares of NetEase Inc. fell after losing profits, while shares of Alibaba Group Holding Ltd. fell as analysts remain cautious about sales growth prospects. Meanwhile, Chinese President Xi Jinping was to take control of decision-making in the financial system by resurrecting a powerful committee.

The dollar rose for the third time in four days before Friday’s release of the Fed’s personal consumption spending index, the Fed’s preferred price indicator, which is expected to pick up amid sustained growth in income and spending. Treasury bills were mixed.

Yields in Germany fell after the gross domestic product of Europe’s largest economy contracted 0.4% in the fourth quarter, more than expected.

On the commodities side, oil continued higher on Thursday, breaking its longest losing streak since December on stronger commodity currencies and signs of risk appetite.

Bitcoin was on the pace of its second monthly rise, ripping apart stocks and other riskier assets that fell amid renewed concerns about rising interest rates.

Key events of this week:

  • US PCE Deflator, Personal Spending, New Home Sales, University of Michigan Consumer Sentiment, Friday

  • Russia’s invasion of Ukraine turns one year old, Friday

Some of the major movements in the markets are:

Stock

  • The Stoxx Europe 600 was up 0.4% as of 8:43 am London time.

  • S&P 500 futures fell 0.2%

  • Nasdaq 100 futures fell 0.5%.

  • Futures for the Dow Jones industrial index fell by 0.1%

  • The MSCI Asia Pacific index fell 0.6%.

  • The MSCI Emerging Markets Index fell 1.3%.

Currencies

  • The Bloomberg Spot Dollar Index rose 0.1%.

  • The euro was almost unchanged at $1.0594.

  • The Japanese yen fell 0.1% to $134.88 per dollar.

  • The offshore yuan fell 0.5% to 6.9527 per dollar.

  • The British pound rose 0.2% to $1.2039.

Cryptocurrencies

  • Bitcoin rose 0.1% to $23,905.

  • Ether is up 0.5% to $1,653.78.

Bonds

  • The yield on 10-year Treasuries remained virtually unchanged at 3.88%.

  • The yield on German 10-year bonds fell three basis points to 2.45%.

  • The yield on British 10-year bonds fell by three basis points to 3.56%.

Goods

  • Brent crude rose 1.2% to $83.22 a barrel.

  • Spot gold rose 0.2% to $1,825.35 an ounce.

This story was produced with the assistance of Bloomberg Automation.

— Contributed by Tassia Sipahutar, Rob Verdonk, Richard Henderson and Matthew Burgess.

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