(Bloomberg) — After a rough start to the year, markets took a breather on Thursday, with US equity futures posting small gains and Treasury yields edging closer to 4%.
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S&P 500 futures fluctuated after the index capped a three-day selloff yesterday. Apple Inc. dipped as Piper Sandler flagged concern about iPhone inventory levels. Tesla Inc. climbed as Cathie Wood started buying the company’s shares after selling them for most of last year. Oil extended a rally on supply disruptions in Libya and conflict in the Middle East. European stocks rose, helped by gains in energy shares.
The consensus from investors is that markets have been overdue a pullback after stocks soared at the end of last year. The Nasdaq 100 Index slid almost 3% in two days of the month and swaps traders have been reining in their bets on rate cuts.
“There was some sort of a ‘dry January’ syndrome across markets these two last sessions,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management.
European inflation data and the monthly US jobs report tomorrow will provide more information about whether central banks have room to start lowering interest rates. Minutes on Wednesday from the Fed’s December meeting suggested rates could remain at restrictive levels “for some time.”
“This confirms that things won’t move as quickly as some would like,” said Lindsay James, investment strategist at Quilter Investors. “It needs to be accepted that the Fed is still very data driven around inflation and the economic data.”
Oil Rally
Brent crude traded near $79 a barrel after supply disruptions in Libya, and as Iran said attacks that killed almost 100 people in the country were carried out to punish its stance against Israel.
Europe’s Stoxx 600 index added 0.2%, buoyed by oil majors including TotalEnergies SE and BP Plc after crude jumped more than 4% in two sessions.
Among equity movers, Next Plc rallied as the British home and clothing retailer raised its profit forecast for the fifth time since June following a successful Christmas shopping season. JD Sports Fashion Plc tumbled 20% in early trading after the British sportswear retailer slashed its profit forecast, blaming unseasonable weather and cautious consumer spending for weak sales in the run-up to Christmas.
In currency markets, the yen weakened on speculation that it’ll be harder for the Bank of Japan to abolish negative interest rates after a powerful earthquake hit the country on New Year’s Day. Morgan Stanley MUFG Securities Co. changed its call for the BOJ rate decision this month and now sees it leaving current policy in place.
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Eurozone S&P Global Eurozone Services PMI, Thursday
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US initial jobless claims, ADP employment, Thursday
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Eurozone CPI, PPI, Friday
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US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday
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Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.2% as of 12:49 p.m. London time
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S&P 500 futures rose 0.1%
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average rose 0.2%
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The MSCI Asia Pacific Index was little changed
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The MSCI Emerging Markets Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.3% to $1.0956
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The Japanese yen fell 0.6% to 144.21 per dollar
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The offshore yuan rose 0.1% to 7.1590 per dollar
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The British pound rose 0.2% to $1.2690
Cryptocurrencies
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Bitcoin rose 1% to $43,382.56
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Ether rose 0.6% to $2,239.44
Bonds
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The yield on 10-year Treasuries advanced four basis points to 3.95%
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Germany’s 10-year yield advanced seven basis points to 2.10%
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Britain’s 10-year yield advanced six basis points to 3.70%
Commodities
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Brent crude rose 0.9% to $78.94 a barrel
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Spot gold rose 0.2% to $2,045.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Julien Ponthus and Sujata Rao.
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