Stocks, US equity futures gain as dollar slides

Bloomberg

Stocks and US equity futures advanced on Friday as investors assessed whether monetary tightening to tackle inflation in the US and Europe is getting closer to being priced in. A gauge of dollar strength dropped the most in a month.
Europe’s Stoxx 600 Index jumped as miners rallied on optimism over Chinese demand. Gains in S&P 500 and Nasdaq 100 contracts exceeded 0.8%. In New York premarket trading, DocuSign Inc rallied after estimate-beating sales and a raised billings forecast. Digital Media Solutions Inc soared on a non-binding “go private” proposal from Prism Data.
The euro touched the highest level in three weeks after the ECB raised rates 75 basis points. Bets the Federal Reserve will hike by the same margin when it meets later this month increased after chair Jerome Powell reiterated Fed is determined to curb price pressures.
European natural gas prices eased as region’s energy ministers gathered for a summit to draw up plans to fix an unprecedented crisis that threatens to undermine broader economy.
Treasuries trimmed their retreat, with the policy-sensitive two-year yield still near the highest since 2007. The Bloomberg Dollar Spot Index slipped 1%, while the pound rallied against the greenback.
Global stocks are on course for their first weekly advance in four, a small measure of respite from the bear-market omens circling markets due to monetary tightening, energy woes and China’s growth slowdown.
“The market has been extraordinarily focused on the actions of the ECB and Fed as they try to bring inflation under control,” said Sebastien Galy, senior macro strategist at Nordea Asset Management. “Eventually this will change and the investment horizon will lengthen considerably. For now though, the market has good reasons not to. Inflation saps consumer confidence and overtightening could send the European and US economies into a recession.”
In contrast with the buoyant mood in equity markets on Friday, Bank of America Corp. strategists flagged that investors are rushing out of US stocks as the likelihood of an economic downturn increases amid a myriad of risks. US stock funds posted outflows of $10.9 billion in the week to September 7, according to EPFR Global data cited by the bank, with the biggest exodus in 11 weeks led by technology stocks.
In Asia, a gauge of regional equities rose the most in two weeks. The yen headed for its best day in a month as Japanese officials gave the strongest hint yet at possible direct market intervention as a response to weakness in the currency.