Global stocks head for best week since March this year

BLOOMBERG

Global stocks were headed for the best week in more than two months, buoyed by bets on Chinese stimulus and exuberance surrounding artificial intelligence firms. The MSCI World Index has climbed 3% this week, the most since the end of March. European shares advanced after Asian stocks staged a broad rally on Friday. US futures rose, after the S&P 500 capped a sixth day of gains on June 15 — its longest winning run since November 2021.
The bull market in stocks is being underpinned by signs that US interest rates are near a peak and China’s efforts to boost economic stimulus. While central banks are still warning that the inflation fight isn’t over, investors are taking comfort in economic reports that point to cooling price pressures.
“There is a lot of cash on sidelines and we should not underestimate investors’ willingness to step in,” said Georgios Leontaris, chief investment officer for Switzerland and EMEA at HSBC Global Private Banking and Wealth.
An unusually large options expiration on Friday may stir additional volatility in US markets. About $4.2 trillion of contracts tied to stocks and indexes are scheduled to mature, according to an estimate from derivatives analytical firm Asym 500.
The event, known as OpEx, generally sees Wall Street managers either roll over existing positions or start new ones. This month it also happens to coincide with the quarterly expiration of index futures and the rebalancing of benchmark indexes including the S&P 500.
In Europe, consumer shares led gains, with LVMH contributing the most to the advance in the Stoxx 600 Index. Mining stocks gave up early gains after Goldman Sachs Group Inc cut the sector to neutral.
In the US, Adobe Inc shares rose in premarket trading after earnings beat expectations and analysts were optimistic about its AI potential. Electric vehicle maker Nikola Corp was set for its best ever week.
The tech rally has upended some bearish analyst calls. Bank of America Corp’s Michael Hartnett said he was wrong in the first half because the US economy has avoided a recession and a credit crunch, and called the AI-driven surge an “unanticipated event.” Still, he drew parallels to 2000 or 2008, warning of a “big rally before big collapse,”  Elsewhere, Turkey’s lira headed for the longest run of weekly losses in 24 years, as the nation’s new economic team curbs its intervention in currency markets.
Treasury yields rose and the dollar was steady. The euro added to this month 15th’s rally following the European Central Bank’s decision to lift interest rates by another quarter-point. Hawkish officials warned on Friday that the central bank’s historic campaign of rate hikes may need to extend into the fall.
“The euro area has more of an inflation problem than the US and therefore the ECB will continue to hike, at least to 4%,” Christian Kopf, head of fixed income and FX for Union Investment Privatfonds GmbH said in an interview with Bloomberg Television.