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BLOOMBERG
European shares climbed, bolstered by record profits at Switzerland’s UBS Group AG and expectations central banks’ rate-tightening cycle may be nearing an end.UBS Group’s more than 7% surge helped the Stoxx 600 benchmark trim its monthly retreat. The lender posted the biggest-ever quarterly profit for a bank as a result of its emergency takeover of Credit Suisse Group AG.
Futures for the S&P 500 were little changed, while contracts on the Nasdaq retreated after the underlying index notched up four straight days of gains.
Markets are closing out the month with price-growth data and China’s weakening economy center stage. European stocks pared their advance after inflation for the region stopped slowing in August, presenting European Central Bank officials with a quandary as they weigh the possibility of tighter policy against signs of flagging growth. The 10-year US Treasury yield, meanwhile, was near a three-week low after weaker-than-expected economic numbers supported predictions for the Fed to ease back on interest-rate hikes.
“The big market catalyst we’re looking for in September is the Fed meeting,” Hugh Gimber, global market strategist at JPMorgan Asset Management, said. “Tomorrow’s payrolls data will be hugely relevant for that meeting. Without a slowdown in wages, a soft landing is impossible.”
US jobless numbers picked up slightly to 235,000 according to economists polled by Bloomberg before initial claims data due on Thursday. Friday’s non-farm payrolls are seen at 170,000 in August versus 187,000 in July, while hourly wage growth is predicted to slow slightly.
Equity benchmarks for mainland China and Hong Kong fell after manufacturing activity in China contracted again, albeit less than feared, while the services PMI showed slowing expansion. The offshore yuan and Australian dollar pared earlier gains against the greenback.
The latest signs of weakness in China were accompanied by further signs of official support. The People’s Bank of China met with lenders and private businesses to discuss improving their access to funding. Two of China’s biggest cities lowered mortgage requirements for some homebuyers following central government guidance, fanning expectations that more will follow suit to arrest a record housing slowdown.
“The problems China have now are deep-seated, structural ones,” said Rob Subbaraman, chief economist and head of global markets research for Nomura Singapore Limited, on Bloomberg Television. “It’s not clear to us that these piecemeal policy measures are really enough to revive the economy.