Equity Futures Rise as China Pledges Fiscal Aid: Markets Wrap

(Bloomberg) -- European stocks and US equity futures rallied, tracking gains in Asia after China pledged fiscal stimulus and technology shares climbed.

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The Stoxx 600 gauge in Europe rose 1% and Nasdaq 100 futures advanced after a strong revenue forecast from Micron Technology Inc. fueled a late-trading rally for the stock. A measure of Asian equities surged around 2%. US Treasuries and the dollar were steady.

While there were no details on the size of China’s planned fiscal spending, the announcement fueled broader risk appetite and bolstered the outlook for industries in Europe that are most exposed to its economy. Some analysts had questioned whether monetary stimulus unveiled earlier in the week would be sufficient amid concerns over deflation and weak consumption.

“Does it change the global story? We are not sure, but for now it’s surely good for the rest of world,” said Kenneth Broux, a strategist at Societe Generale SA. “Individual stock names in Europe are up as people are betting the Chinese consumer will go out and spend, including on luxury items.”

Among the steps, China is considering injecting up to 1 trillion yuan ($142 billion) of capital into its biggest state banks to increase their capacity to support the struggling economy, Bloomberg reported Thursday, citing people familiar with the matter. It would be the first time since the global financial crisis in 2008 that Beijing has injected capital into its big banks.

Powell Speaks

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

On Wednesday, Federal Reserve Governor Adriana Kugler said she “strongly supported” the US central bank’s rate cut last week, adding it will be appropriate to make additional rate cuts if inflation continues to ease as expected.

At the end of the week, the Fed’s preferred price metric and a snapshot of consumer demand are seen corroborating last week’s aggressive interest-rate cut and Powell’s view that the economy remains strong.

In commodities, oil fell for a second day as Saudi Arabia was reported to be weighing increasing output, and factions in Libya reached a deal that opens the way to the return of some crude production.

Separately, the US, European Union, and major powers in the Middle East including Saudi Arabia and Qatar have proposed a three-week cease-fire between Israel and Hezbollah in Lebanon, part of a bid to clear the way for negotiations and avert an all-out war in the region.

Key events this week:

ECB President Christine Lagarde speaks, Thursday
US jobless claims, durable goods, revised GDP, Thursday
Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
China industrial profits, Friday
Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

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

Currencies

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

Cryptocurrencies

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

Bonds

The yield on 10-year Treasuries declined one basis point to 3.78%
Germany’s 10-year yield was little changed at 2.17%
Britain’s 10-year yield was little changed at 3.98%

Commodities

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

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Winnie Hsu, Divya Patil and Richard Henderson.

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