European stocks advance as bank earnings show upside

Bloomberg

European stocks ticker higher as corporate earnings continued to deliver upside surprises while investors assessed remarks from central bankers that higher interest rates are needed to bring inflation under control.
The Stoxx 600 Index rises 0.2%, led by banks, as HSBC Holdings Plc posted better-than-estimated profits. S&P 500 contracts slipped following the best month for US stocks since November 2020 pared the annual loss in the
underlying gauge to 13%.
The dollar falls, while Treasury yields inched higher but at about 2.67% the 10-year rate is well down from June’s peak near 3.50%. The yen jumped for a fourth session versus the greenback. Oil retreated.
“It is fair to say that this earnings season has so far revealed pockets of corporates turning cautious but not a widespread move, and the market has put in one of the strongest rallies on record,” Deutsche Bank AG strategists including Binky Chadha wrote in a report. “With earnings weakness already widely expected, a more than typical rally was more likely than not in the absence of signs of widespread corporate risk aversion, especially given the large
selloff and very low investor
positioning coming in.”
The risk of a recession has cooled expectations for how sharply the Fed has to hike rates to tame inflation. That spurred a July rebound in stocks and bonds. But market jumps that ease financial conditions can imperil the goal of curbing demand to contain the cost of living, adding pressure on the central bank.
Federal Reserve Bank of Minneapolis President Neel Kashkari said Sunday the US central bank is committed to reaching its long-term inflation goal of 2%. Before that, Fed Bank of Atlanta President Raphael Bostic said the monetary authority has further to go in raising borrowing costs.
Investors are also monitoring US House Speaker Nancy Pelosi’s trip to Asia. A statement from her office skipped any mention of a possible stopover in Taiwan. A visit may stoke US-China tension over the island.
The Stoxx Europe 600 rose 0.2% as of 8:43 am London time and futures on the S&P 500 falls 0.2%.
While futures on the Nasdaq 100 were little changed,
futures on the Dow Jones
Industrial Average fell 0.2%.
The MSCI Asia Pacific Index rose 0.8% and the MSCI Emerging Markets Index rises as much as 0.2%.
While the Bloomberg Dollar Spot Index falls 0.2%, the euro rose 0.1% to $1.0234. The Japanese yen rises 0.7% to 132.39 per dollar. The offshore yuan fell 0.1% to 6.7585 per dollar and the British pound rose 0.2% to $1.2199.
While the yield on 10-year Treasuries advanced one basis point to 2.66%, Germany’s 10-year yield advanced four basis points to 0.86% Britain’s 10-year yield advanced four basis points to 1.90%.
Brent crude fell 0.6% to $103.39 a barrel and spot gold was little changed.