Final hours! Save up to 55% OFF InvestingProCLAIM SALE

World stocks gain, US yields fall at start of jam-packed week

Published 29/07/2024, 10:47 am
© Reuters. FILE PHOTO: An office employee walks in front of the Bank of Japan building in Tokyo, Japan, April 7, 2023. REUTERS/Androniki Christodoulou/File Photo
USD/JPY
-
US500
-
JP225
-
MSFT
-
AAPL
-
AMZN
-
LCO
-
CL
-
NQH25
-
META
-

By Chris Prentice and Wayne Cole

NEW YORK/SYDNEY (Reuters) -Global stocks advanced and longer-dated U.S. yields slipped on Monday, at the start of a week jammed with earnings and a trio of central bank meetings that could see the United States and Britain open the door to interest rate cuts.

U.S. jobs data for July, closely watched surveys on U.S. and global manufacturing, and euro zone gross domestic product and inflation data are all due later this week.

The markets were jittery ahead of Big Tech earnings and concern over the Federal Reserve's next moves. Big Tech stocks were up, but off the day's highs.

S&P 500 companies representing about 40% of index's market value will report this week, including tech darlings Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN) and Facebook-parent Meta Platforms.

"The market is fearful that if the Big Tech names disappoint, it could drag on the entire market. The markets were up handily and then we saw them pull back," said Quincy Krosby, chief global strategist for LPL Financial in Charlotte, North Carolina.

The U.S. Treasury will outline its bond sale plans for the quarter, while China's politburo meeting could produce more stimulus following surprise rate cuts last week.

After a benign June inflation report, markets are wagering that the Federal Reserve will lay the groundwork for a September rate cut at the close of its two-day policy meeting on Wednesday.

Futures are fully priced for a quarter-point easing and even imply a 12% chance of 50 basis points in cuts, and have 68 basis points of easing priced in by December.

"The FOMC is set to hold steady but is likely to revise its statement to hint that a cut at the following meeting in September has become more likely," wrote analysts at Goldman Sachs (NYSE:GS) in a note.

"We now see the risks to the Fed path as tilted slightly to the downside of our baseline of quarterly rate cuts, though not quite as much as market pricing implies."

The Bank of Japan also meets on Wednesday, and markets imply a 70% chance it will hike rates by 10 basis points to 0.2%, with some chance it could move by 15 basis points.

Investors are less sure whether the Bank of England will ease at its meeting on Thursday, with futures showing a 51% probability of a cut.

EARNINGS TEST

MSCI's gauge of stocks across the globe rose 1.03 points, or 0.13%, to 804.51.

European shares eased as investors remained risk averse. The pan-European STOXX 600 index closed 0.2% lower, with autos the biggest decliner among major sectors.

The Nasdaq and the S&P 500 rose on Monday, buoyed by megacap stocks, while the Dow Jones ended down.

The S&P 500 gained 4.44 points, or 0.08%, to 5,463.54 and the Nasdaq Composite gained 12.32 points, or 0.07%, to 17,370.20. The Dow Jones Industrial Average fell 49.41 points, or 0.12%, to 40,539.93.

With expectations for earnings high, any hint of disappointment will test the mega-caps' sky-high valuations.

"With some sizeable moves implied by the options market for the individual names on the day of reporting, movement at a stock level could resonate across other plays within their sector and potentially promote volatility," said Chris Weston, head of research at broker Pepperstone.

"Company earnings don't come much bigger than Microsoft, where the options market implies a move (higher or lower) of 4.7% - the after-market session on Tuesday could get lively."

In currency markets, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.18% at 104.56

The euro retreated 0.33% at $1.0821.

The Japanese yen traded at 153.99.

The yield on benchmark U.S. 10-year notes fell 3 basis points to 4.171%, a more than one-week trough.

In commodities markets, gold slipped as the dollar advanced. Spot prices lost 0.08% to $2,383.64 an ounce, and U.S. gold futures settled 0.1% lower at $2,377.80.[GOL/]

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024.  REUTERS/Brendan McDermid/File Photo

Oil prices fell in volatile trading. Israeli officials said they wanted to avoid an all-out war in the Middle East following a rocket strike in the Israeli-occupied Golan Heights, which Israel and the United States attributed to Lebanese armed group Hezbollah. [O/R]

Brent crude oil futures settled down 1.7% at $79.78 a barrel. U.S. crude ended 1.8% lower at $75.81 a barrel.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.