Luxury rally boosts Europe stocks; US futures advance

BLOOMBERG   

Stocks rose as investors found confidence in strong earnings from Cartier maker Richemont and signs that US lawmakers are making progress on a deal to raise the debt-ceiling. The dollar strengthened.
Richemont gained as much as 7.8% to a record, fuelling a broad rally across European luxury stocks. S&P 500 futures edged higher after President Joe Biden and House Speaker Kevin McCarthy postponed a meeting on the debt ceiling that was planned. The delay reflects headway in the staff-level discussions, according to people familiar with the talks.
“We believe that they will find a deal — we need to remember negotiations have only just started,” said Marie Jacot-Cardoen, chief executive officer of Edmond de Rothschild Asset Management France, on Bloomberg Television. “It is likely political antagonism will increase before deal is reached, but we believe a compromise will be found.”
Globally, stock markets have seesawed on mixed US economic data and ongoing worries about the debt ceiling. While tech stocks have continued to outperform, with the Nasdaq 100 Index climbing 1% so far, there’s plenty of skepticism about the industry.
Bank of America Corp (BofA) strategists led by Michael Hartnett wrote in a note that a recession will “crack credit and tech” just as it did in 2008.
Investors remain focused on what major central banks will do next in their rate-hiking campaigns to quell inflation. US data showed initial jobless claims reached the highest since October 2021 while producer prices rose less than economists expected, suggesting Federal Reserve policy tightening may finally be having an effect.
“There’s a chink of light — inflation is beginning to show some signs of easing, boosting hopes the Fed’s rate hiking cycle is near an end and this means companies can start prioritising growth, rather than servicing debt,” said Angeline Ong, a financial analyst at IG Group.
The dollar rose as it headed for the biggest weekly gain since February. Treasury yields mostly ticked higher. Meanwhile, South Africa’s rand sank 1.6% against the dollar to the lowest level on record, before recovering. Elsewhere in emerging markets, attention is turning to Turkey’s elections. Banking stocks have rallied in Istanbul, heading for their best weekly performance since 2002, when incumbent President Recep Tayyip Erdogan’s Ak Party rose to power. Some investors expect the opposition to restore more orthodox monetary policy should it gain power.
In other corporate news, THG Plc shares fell 23% after the firm ended talks with Apollo Global Management Inc in the latest failed takeover attempt of the struggling UK online retailer.
Tesla Inc gained in US premarket trading after the electric-car maker raised prices of its Model X and Model S cars in the US, the third change in less than a month. The company also said it is recalling virtually every car it’s sold in China due to a braking and acceleration defect. Fox Corp slipped as Wells Fargo Securities cut the recommendation on the media company’s stock to equal-weight from overweight, saying there’s some strategic uncertainty ahead.
S&P 500 futures rose 0.3% in New York  and Nasdaq 100 futures rose 0.1%. While futures on the Dow Jones Industrial Average rose 0.3%, the Stoxx Europe 600 rose 0.4% and the MSCI World index was little changed. The Bloomberg Dollar Spot Index rose 0.2% and the euro fell 0.2% to $1.0890. While the British pound was unchanged at $1.2511, the Japanese yen fell 0.3% to 134.98 per dollar.