(Bloomberg) — Stocks rose Thursday as stimulus in China and better-than-expected data from Germany calmed some nerves in an anxious wait for a key speech by Federal Reserve Chairman Jerome Powell. Government bond yields and the dollar gauge edged lower.
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Energy shares were among the biggest gainers in Europe, while U.S. futures rose after positive closes for the S&P 500 and Nasdaq 100. Shares in Hong Kong rose after a delayed start to trading there due to a storm.
Sentiment was boosted after China stepped up stimulus with another 1 trillion yuan ($146 billion) of measures and Germany’s economy proved more resilient than initially thought in the second quarter. Still, traders expect markets to remain volatile as they look to Powell’s comments on Friday at the Jackson Hole meeting for clues on the pace of US monetary policy tightening.
Crude added to the rally, which could fuel renewed concern about whether price pressures have peaked. Natural gas prices have soared to new highs, intensifying the energy crisis that threatens the eurozone economy and, by extension, the global outlook.
Fed officials in the run-up to Jackson Hole were clear they see more monetary tightening, an announcement that undermined stocks and bonds’ rebound from mid-June lows. The tension in the markets is whether these assets will continue to return to the lowest levels of the year.
“The market is really trying to justify the bear market rally and it’s looking for that dovish turn from the Fed and it’s unlikely to get it,” Mehwish Ayub, senior investment strategist at State Street Global Advisors, said on Bloomberg Television. “We should continue to expect that volatility, not just before Jackson Hole, before any narrative from Fed officials.”
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What to watch this week:
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US GDP, Initial Jobless Claims, Thursday
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The Kansas City Federal Reserve hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
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The minutes from the ECB for July, Thursday
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Fed Chairman Powell speaks in Jackson Hole, Friday
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US Personal Income, PCE Deflator, University of Michigan Consumer Attitudes, Friday
Some of the major moves in the markets:
Stock up
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The Stoxx Europe 600 was up 0.7 percent by 8:30 a.m. London time
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S&P 500 futures rose 0.9%
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Nasdaq 100 futures rose 1%
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Dow Jones Industrial Average futures rose 0.7%
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MSCI Asia Pacific Index fell 0.5%
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MSCI Emerging Markets index fell 0.4%
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.5% to $1.0015
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The Japanese yen rose 0.5% to 136.46 per dollar
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The offshore yuan rose 0.4% to 6.8525 per dollar
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The British pound rose 0.5% to $1.1858
Bonds
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The 10-year Treasury yield fell two basis points to 3.08%
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Germany’s 10-year bond yield fell two basis points to 1.35%
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Britain’s 10-year bond yield fell five basis points to 2.64%
Goods
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Brent crude rose 0.6% to $101.79 a barrel
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Spot gold rose 0.7% to $1,763.35 an ounce
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