European stocks rise after holiday; bonds advance

BLOOMBERG

Shares in Europe rose after a holiday break, tracking gains in Asia and on Wall Street as investors bet that the Federal Reserve will cut interest rates as early as March.
The Stoxx Europe 600 climbed 0.3% in early trading. Technology stocks were among the biggest gainers as Prosus NV rebounded from a slump triggered by a selloff in Tencent Holdings Ltd. Miners advanced as iron ore held near an 18-month high, with Anglo American Plc up more than 2% and Glencore Plc rising 1.8%. On the downside, container shipping firms fell after AP Moller-Maersk AS said it’s preparing to resume shipping through the Red Sea. The stocks had rallied on expectations that the disruption caused by attacks on Red Sea container traffic would allow companies to raise the prices. Maersk dropped as much as 5% Hapag-Lloyd AG slumped 4.7%.
US futures were virtually flat after the S&P 500 closed within 0.5% of its record high, achieved early last year when interest rates remained at pandemic lows. The 10-year Treasury yield fell three basis points after the auctions drew buyers as the market prices in an aggressive path of Fed easing in 2024. Bond yields across Europe also fell. The dollar was steady against major currencies.
“S&P 500 buyers will certainly not back down before sending the index to a fresh high this week, or the next,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank SA. Still, “the market optimism is overstretched. The Fed will probably cut rates but not at the speed that’s currently priced in. Once the Santa high fades, the hangover will hit,” she said.
Australia’s S&P/ASX 200 index rose to its highest since April 2022, fueled by gains in miners. Mainland China equities rebounded from earlier losses, after data showed a quickening speed of growth in the country’s industrial profits, helped by favorable base effects. US stocks have risen 4.5% this month so far, with the gain since the start of the year now 24%.