European stocks, US futures extend rally

Bloomberg

European stocks climbed with US equity futures, building on Wall Street’s advance after Federal Reserve Chair Jerome Powell said the central bank had made progress in its battle against inflation.
The Stoxx Europe 600 index added about 0.6%, with traders now looking ahead to the European Central Bank’s policy decision after mixed inflation data reignited debate about how much rates in euro area should rise. Technology stocks led the advance, buoyed by an upbeat outlook from German chipmaker Infineon Technologies.
Futures on the S&P 500 and Nasdaq 100 rose, with the latter outperforming. Meta Platforms Inc. surged more than 20% in US premarket trading after the social-media giant’s earnings and buyback news.
Powell’s comment that the “disinflation process has started” suggested that the aggressive tightening cycle is starting to reduce the pace of price growth, even as he warned of a “couple” more hikes to come. Positioning in US swaps markets assumes the Fed is getting closer to cutting rates as traders bet that economic conditions are likely to keep it from the additional rate increases that policy makers still anticipate.
“The more he talked, the more dovish he was,” Charles-Henry Monchau, chief investment officer at Banque Syz, said of Powell’s briefing. “It’s possible we’ll continue to see a series of volatility, but definitely the conditions seems to be more risk-on than last year,” he said on Bloomberg Television.
The dollar continued its decline against both Group-of-10 and emerging-markets currencies, and extended its fall for a third day. A gauge of the greenback’s strength was at the lowest level since April as global investors position for a potential peak in US interest rates.
Treasury yields held a drop from the US session of about 10 basis points in key maturities across the 2-year to 10-year zone. European bonds broadly tracked closing moves in Treasuries, with Germany’s 10-year yield down four basis points.
The UK’s benchmark stock index underperformed and 10-year gilt yields fell more than eight basis points ahead of another expected outsized rate increase of 50 basis points by the Bank of England.
The ECB is seen following with a hike of similar magnitude shortly after.
A benchmark of Asian equities climbed about 0.5%, with Hong Kong-listed technology companies among the top performers. The picture was more mixed in Japan and mainland China.
Elsewhere in markets, Brent crude oil was little changed after slumping on Wednesday. Gold hovered around a nine-month high and Bitcoin hit the highest since August in the wake of Fed decision.
The Stoxx Europe 600 rose 0.6% as of 9:43 am London time and S&P 500 futures rose 0.5%.
While Nasdaq 100 futures rose 1.4%, futures on the Dow Jones Industrial Average fell 0.1% and the MSCI Asia Pacific Index rose 0.2%. The MSCI Emerging Markets Index rose 0.3%.
The Bloomberg Dollar Spot Index was little changed and the euro was little changed at $1.0999.
While the Japanese yen was little changed at 128.96 per dollar, the offshore yuan fell 0.1% to 6.7272 per dollar. The British pound fell 0.3% to $1.2333.
The yield on 10-year Treasuries was little changed at 3.41% and Germany’s 10-year yield declined four basis points to 2.25%. Britain’s 10-year yield declined 10 basis points to 3.21%.