Stocks rose with US index futures as a rally in Chinese tech shares boosted sentiment and concern about contagion from banking turmoil continued to wane.
Contracts on the three main US gauges climbed, with the Nasdaq 100 poised to extend its best quarter since 2020. Alphabet Inc and Tesla rose in premarket trading, while tech shares were among the best performers in European equities.
Sentiment for the sector got a boost as Alibaba Group Holdings Ltd’s massive overhaul plan sparked optimism about a recovery in Chinese tech companies that were stung by a crackdown from Beijing over the past two years. The Hang Seng Tech Index rose 2.5%.
Bank shares outperformed in Europe, with UBS Group AG rising after the Swiss lender brought back a former CEO to oversee the acquisition of Credit Suisse Group AG.
Treasuries rose after a two-day selloff and the dollar was steady as investors awaited remarks from Federal Reserve officials and economic releases for clues on monetary policy. In particular focus will be data on the central bank’s preferred measure of inflation — the so-called core PCE deflator — which is likely to factor into the Federal Reserve’s next decision.
Swaps traders have priced in about a 50% probability the Fed will raise rates by a quarter point at its next meeting, with plans to ease thereafter. However, several strategists say markets are wrong in expecting imminent rate cuts.
The bad news for markets “is that the Fed is very unlikely to cut rates until Q2 2024, unless US growth slows more markedly than we anticipate, leaving us with a ‘higher for longer’ scenario,” Willem Sels, global chief investment officer at HSBC Private Banking and Wealth, wrote in a note.