Europe stocks gain, focus turns to inflation data

BLOOMBERG

European stocks rose on Monday ahead of inflation figures in the US and UK that could confirm interest rates have topped out. The Stoxx 600 index climbed 0.7%, buoyed also by Friday’s gains on Wall Street. Health firms were among the strongest performers, with Novo Nordisk A/S rallying almost 4% after a study backed the use of Wegovy, its blockbuster weight-loss drug, to cut heart attacks and deaths in obesity patients.
Earlier, Asian stocks rose, led by Taiwan Semiconductor Manufacturing Co, which posted its first monthly sales gain since February, indicating the global chip market is recovering. Contracts for the S&P 500 and the Nasdaq 100 slipped about 0.2%, ceding some of Friday’s tech-led gains.
US consumer price data on Tuesday is expected to show inflation easing to a year-on-year rate of 3.3% in October, down from 3.7% in the prior month. UK numbers are due on Wednesday and are also forecast to show slowing price growth. Treasury yields slipped to about 4.65%, down around 30 basis points so far this month. While money markets are sticking with bets for the Fed to start cutting rates from next year, economists differ on how soon and fast the policy easing might come. Morgan Stanley forecast deep interest-rate cuts over the next two years, starting from next June, while Goldman Sachs predicted the first cut around end-2024.
“We had a really pivotal week last week, all sending a similar message, which is I think, the Fed is done,” Eric Robertsen, global head of research at Standard Chartered Bank said on Bloomberg Television. “The event risk around long-term interest rates heading higher from here has been significantly reduced.”
Meantime, more signs of thawing US-China ties are emerging, with Joe Biden and Xi Jinping due to meet on Wednesday and Beijing said to be weighing ending a freeze on purchases of Boeing Co’s aircraft. Boeing shares rose more than 3% in New York premarket trading.
“All of these things are starting to line up, showing that the two sides do have intent to make this look like a better outcome,” Helen Zhu, chief investment officer at Nan Fung Trinity HK Ltd, said in an interview with Bloomberg TV.
Investors are also keeping an eye on the yen, which fell to a fresh 2023 low against the dollar, raising concerns that authorities will intervene to support the currency. Oil extended three weeks of declines on demand worries, with West Texas Intermediate trading near $76 ahead of reports by Opec, which will publish its monthly market report  and the International Energy Agency. Bitcoin hovered near $37,000 — around the highest price in 18 months.