(Bloomberg) — European stocks gained, with positive earnings from some of the region’s biggest companies lifting the mood after markets were roiled by a more hawkish outlook for interest rates.
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The Stoxx Europe 600 index gained about 0.4%, with miners leading the advance as iron ore prices jumped on signs of improving demand from China. S&P 500 futures edged higher after the gauge clocked a third day of losses on Monday to close near a two-month low.
Rio Tinto Plc rose as much as 2.2% after the miner said it expects steel exports out of China to support iron ore demand. Adidas AG climbed more than 5% after raising its revenue and profit outlook, while LVMH led the luxury sector higher on the back of reassuring results. Volvo AB gained after reporting robust earnings.
The technology sector, however, weighed on the benchmark, with ASML Holding NV plunging more than 6% after missing estimates for first-quarter orders.
Treasury yields traded in a narrow range near 2024 highs, and a gauge of the dollar held near a five-month high after Federal Reserve Chair Jerome Powell said Tuesday it would likely take longer to have confidence that inflation is headed toward the central bank’s target. The remarks represented a shift in his message after a key measure of inflation exceeded forecasts for a third month.
After starting the year by pricing in as many as six rate cuts in 2024, or 1.5 percentage points of easing, traders are now doubtful there will even be a half point of reductions. Market-implied expectations for Fed rate cuts — which have collapsed in the past two weeks — declined further after Powell’s comment on inflation.
On Tuesday, Fed Vice Chair Philip Jefferson said he expects inflation will continue to moderate with interest rates at their current level but persistent price pressures would warrant holding borrowing costs high for longer. Richmond Fed President Thomas Barkin said some recent data, including the consumer price index, has not “been supportive” of a soft landing.
Meanwhile, tensions in the Middle East continue to simmer. Israel is weighing a response to what was the first attack on the Jewish state from Iranian soil. Saudi Arabia and the United Arab Emirates called for maximum “self-restraint” to spare the region “from the dangers of war and its dire consequences,” in an unusually frank joint statement Wednesday.
European natural gas edged higher for a fifth day. Oil dipped, with Brent crude falling below $90 a barrel, as traders wait to see how Israel would respond to Iran’s weekend attack. Gold held near a record high.
Key events this week:
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Eurozone CPI, Wednesday
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Fed issues its Beige Book, Wednesday
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Cleveland Fed President Loretta Mester speaks, Wednesday
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Fed Governor Michelle Bowman speaks, Wednesday
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BOE Governor Andrew Bailey speaks, Wednesday
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Taiwan Semiconductor earnings, Thursday
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US Conf. Board leading index, existing home sales, initial jobless claims, Thursday
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Fed Governor Michelle Bowman speaks, Thursday
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New York Fed President John Williams speaks, Thursday
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Atlanta Fed President Raphael Bostic speaks, Thursday
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BOE Deputy Governor Dave Ramsden and ECB Governing Council member Joachim Nagel speak, Friday
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Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.4% as of 9:18 a.m. London time
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S&P 500 futures rose 0.2%
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Nasdaq 100 futures were unchanged
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Futures on the Dow Jones Industrial Average rose 0.3%
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The MSCI Asia Pacific Index fell 0.3%
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The MSCI Emerging Markets Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.1% to $1.0634
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The Japanese yen was little changed at 154.61 per dollar
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The offshore yuan rose 0.2% to 7.2469 per dollar
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The British pound rose 0.3% to $1.2464
Cryptocurrencies
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Bitcoin rose 0.5% to $63,361.63
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Ether rose 0.1% to $3,075.51
Bonds
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The yield on 10-year Treasuries declined two basis points to 4.65%
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Germany’s 10-year yield was little changed at 2.48%
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Britain’s 10-year yield was little changed at 4.30%
Commodities
This story was produced with the assistance of Bloomberg Automation.
—With assistance from Abhishek Vishnoi, Michael Msika and Winnie Hsu.
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