(Bloomberg) — European stocks struggled to build on a two-day rally as traders sought fresh catalysts in the wake of the latest tech-driven gains in the US.
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The Stoxx 600 slipped 0.1%, though the basic resources and travel sectors gained. While Wall Street is shut Wednesday for a US holiday, contracts on the S&P 500 and Nasdaq 100 edged up after the underlying gauges closed at fresh record highs. That advance was powered by another surge in artificial intelligence bellwether Nvidia Corp., which became the world’s most valuable company at over $3 trillion.
Global stocks have broadly shrugged off political tensions in France and signs the Federal Reserve could wait until December to cut interest rates. Instead, investors are focusing on the resilient economic growth picture that should continue to support corporate earnings, especially in the technology sector. UK data on Wednesday added to signs inflation is slowing across the developed world.
“We are in a soft landing scenario, central banks have started easing policy or will start to ease soon, and we may be facing a wave of positive productivity shock thanks to technology,” said Benoit Anne, head of investment solutions at MFS Investment Management. “Put all that together and you have a very supportive environment for global equities.”
While US Treasuries aren’t trading on Wednesday, government bond yields across Europe edged higher. UK 10-year government borrowing costs rose about three basis points and the pound firmed despite data showing inflation had slowed to the Bank of England’s 2% target as price pressures remained sticky in Britain’s key services sector.
The data all but rules out a rate cut at the BOE’s Thursday meeting, according to Zara Nokes, global market analyst at JPMorgan Asset Management.
“If this stickiness in domestic price pressures continues, alongside ongoing resilience in economic activity, an August rate cut could well be off the table too,” she said.
Investors also kept an eye on developments in France, which got a scolding from the European Union for breaking the bloc’s deficit and debt rules. The spread between 10-year French bond yields relative to German peers is just under 80 basis points amid concerns that the upcoming snap election will result in a win for far-right groups with high-spending policies.
While the selloff in French assets has abated somewhat, the political risks are keeping investors and companies on edge. On Wednesday, Italian sneaker firm Golden Goose Group SpA pulled the plug on its stock market IPO, citing a “significant deterioration in market conditions.”
Key events this week:
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US Juneteenth holiday, Wednesday
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China loan prime rates, Thursday
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Eurozone consumer confidence, Thursday
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UK BOE rate decision, Thursday
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US housing starts, initial jobless claims, Thursday
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Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
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US existing home sales, Conf. Board leading index, Friday
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Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 was little changed as of 12:15 p.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.2%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 1%
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The MSCI Emerging Markets Index rose 1.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.1% to $1.0751
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The Japanese yen was little changed at 157.87 per dollar
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The offshore yuan was little changed at 7.2777 per dollar
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The British pound rose 0.2% to $1.2731
Cryptocurrencies
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Bitcoin rose 0.8% to $65,379.38
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Ether rose 2.6% to $3,548.41
Bonds
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The yield on 10-year Treasuries was little changed at 4.22%
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Germany’s 10-year yield advanced two basis points to 2.42%
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Britain’s 10-year yield advanced three basis points to 4.08%
Commodities
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Brent crude was little changed
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Spot gold fell 0.1% to $2,326.64 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Julien Ponthus, Abhishek Vishnoi, Shery Ahn, Hooyeon Kim, Matthew Burgess, Alex Gabriel Simon, John Cheng and Aya Wagatsuma.
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