Stocks Rise, US Futures Edge Higher Before Powell: Markets Wrap

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(Bloomberg) — Stocks advanced and US equity futures inched higher ahead of commentary due later from Federal Reserve Chair Jerome Powell that may shape views on the central bank’s rate path.

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Energy shares led gains in Europe after oil major BP Plc boosted shareholder returns and reported record profit. Futures on the S&P 500 and Nasdaq 100 contracts were modestly higher, while those on the Dow were flat. Pinterest Inc. fell in premarket trading after posting weaker-than-forecast revenue.

A gauge of Asian shares gained after its biggest two-day drop in four months. Baidu Inc. surged after affirming it will launch a ChatGPT-like bot in March.

The dollar steadied after weakening against all members of the Group of 10 earlier, while Treasuries clawed back some of the two-day rout that was sparked by traders ramping up bets on future Fed tightening. The recent moves have taken the shine off the best start to a year for cross-asset returns since 1987.

Investors are assessing whether Powell will dampen market optimism for interest-rate cuts later in 2023, following January’s strong payrolls report and comments from other Fed officials about the possibility of a higher peak than policy makers had previously expected.

“I expect that Powell will drive home that point that they’ve done a lot and there’ll be a tightening that is going to impact the economy later on this year,” Jack McIntyre, a portfolio manager at Brandywine Global Investment Management LLC, said on Bloomberg Television.

In Asia, the yen gained after Japan’s wage data blew past estimates, stoking bets the central bank will adjust or back away from its stimulus program under a new governor.

The Adani group’s stocks climbed, pausing a rout that exceeded $100 billion, as the conglomerate’s founders prepaid some debt and traders covered short positions.

Turkish assets extended declines as the country continued to grapple with earthquakes that killed at least 4,000 people in Turkey and Syria.

Geopolitical concerns are also back on the radar. The US is preparing to impose a 200% tariff on Russian-made aluminum, while the US started to recover some parts from the Chinese balloon that a fighter jet shot down off the coast of South Carolina.

Elsewhere, oil rose for a second session after Saudi Arabia unexpectedly raised its crude prices to Asia, signaling confidence in the demand outlook. Gold advanced.

Read: Bond Traders Quickly Come Around to Fed’s View on Peak for Rates

Key events:

  • US trade, Tuesday

  • Fed Chair Jerome Powell interviewed by David Rubinstein at the Economic Club of Washington, Tuesday

  • President Joe Biden delivers the State of the Union address before Congress, Tuesday

  • US wholesale inventories, Wednesday

  • New York Fed President John Williams is interviewed at Wall Street Journal live event, Wednesday

  • US initial jobless claims, Thursday

  • ECB President Christine Lagarde participates in EU leaders summit, Thursday

  • Bank of England Governor Andrew Bailey appears before Treasury Committee, Thursday

  • US University of Michigan consumer sentiment, Friday

  • Fed’s Christopher Waller and Patrick Harker speak, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.2% as of 10:06 a.m. London time

  • S&P 500 futures rose 0.1%

  • Nasdaq 100 futures rose 0.3%

  • Futures on the Dow Jones Industrial Average were unchanged

  • The MSCI Asia Pacific Index rose 0.4%

  • The MSCI Emerging Markets Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro fell 0.1% to $1.0710

  • The Japanese yen rose 0.6% to 131.89 per dollar

  • The offshore yuan rose 0.1% to 6.7975 per dollar

  • The British pound fell 0.1% to $1.2001

Cryptocurrencies

  • Bitcoin rose 0.3% to $22,988.38

  • Ether rose 0.2% to $1,641.03

Bonds

  • The yield on 10-year Treasuries declined two basis points to 3.62%

  • Germany’s 10-year yield was little changed at 2.30%

  • Britain’s 10-year yield was little changed at 3.24%

Commodities

  • Brent crude rose 1.7% to $82.39 a barrel

  • Spot gold rose 0.4% to $1,875.28 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott, Matthew Burgess, Tony Jordan, Tassia Sipahutar and Michael Msika.

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