(Bloomberg) — Global stocks rallied after China pledged fiscal stimulus and traders increased their bets on interest rate cuts by major central banks.
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U.S. futures rose as U.S.-listed Chinese stocks advanced and Micron Technology Inc. soared in premarket trading on strong revenue expectations. Europe’s Stoxx 600 index headed for a record high as luxury and mining stocks with exposure to China rose. Yields on government bonds and the dollar fell.
Growing expectations that the Federal Reserve and the European Central Bank will continue their easing path are supporting the markets. Traders are awaiting a pre-recorded speech from Federal Reserve Chairman Jerome Powell and jobs data later Thursday.
“The message over the past 10 days from monetary and fiscal policymakers around the world has been clear and unmistakable: ‘policy’ is well and truly back,” said Michael Brown, strategist at Pepperstone Group Ltd. “The path of least resistance is likely to continue to lead to the upside, both in the short and medium term.”
Top Chinese leaders’ pledges to shore up fiscal spending and revive growth on Thursday added to a raft of measures by Beijing this week that have boosted local assets and fueled broader risk appetite.
Money markets have turned to favor a half-point Fed cut in November, with traders now pricing in nearly 39 basis points of cuts following lackluster US consumer data earlier this week.
The US central bank’s price gauge and a snapshot of consumer demand will provide more clues about the health of the economy on Friday.
“The Federal Reserve is more concerned about growth than it is letting on,” Vanguard chief economist Joe Davis said on Bloomberg TV. “Our view is that they will be more aggressive in the short term.”
Chinese doubts
In China, the CSI 300 Index was on track for its biggest weekly gain in almost a decade after the stimulus promise. But questions remain about the long-term effects of the measures.
“I wouldn’t be surprised if we see a small pullback tomorrow,” Helen Jewell, chief investment officer at BlackRock Fundamental Equities EMEA, told Bloomberg TV. “This is what’s happening in the markets right now: you risk one day and risk the next. The Chinese economy is still very vulnerable.”
Swiss cut
Elsewhere, the Swiss National Bank cut rates by 25 basis points in an effort to contain the strength of the Swiss franc, which has seen its strongest rally in almost a decade.
On the commodity side, oil fell for a second day as Saudi Arabia reportedly held back rising production and factions in Libya reached a deal that paves the way for the return of some crude output.
Israeli assets gathered after the US, the European Union and major Middle Eastern powers including Saudi Arabia and Qatar proposed a three-week ceasefire between Israel and Hezbollah in Lebanon.
Main events this week:
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ECB President Christine Lagarde speaks on Thursday
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US unemployment claims, durable goods, revised GDP, Thursday
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Fed Chairman Jerome Powell delivers pre-recorded remarks Thursday at the 10th annual US Treasury Market Conference
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Industrial gains in China, Friday
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Consumer confidence in the eurozone, Friday
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U.S. PCE, University of Michigan Consumer Confidence, Friday
Some of the major moves in the markets:
Stocks
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S&P 500 futures rose 0.8% as of 6:08 a.m. New York time
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Nasdaq 100 futures rose 1.3%
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Futures on the Dow Jones Industrial Average rose 0.5%
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The Stoxx Europe 600 rose 1%
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The MSCI World Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro was little changed at $1.1141
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The British pound rose 0.2% to $1.3354
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The Japanese yen was little changed at 144.69 per dollar
Cryptocurrencies
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Bitcoin rose 0.5% to $63,824.27
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Ether rose 1.6% to $2,621.78
Bonds
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The yield on ten-year government bonds fell by two basis points to 3.77%
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The German ten-year yield fell by three basis points to 2.15%
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The British ten-year yield remained little changed at 3.99%
Raw materials
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West Texas Intermediate crude fell 1.6% to $68.55 a barrel
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Spot gold rose 0.4% to $2,668.62 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Winnie Hsu, Divya Patil, Richard Henderson and Ben Priechenfried.
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