Stocks mixed as knife-edge ECB decision nears: Markets Wrap

   2023-09-14 08:09

(Bloomberg) — European markets struggled for direction before an interest-rate decision later Thursday. Oil neared a 10-month high, while Nasdaq futures advanced before Arm Holdings Plc makes its debut as the biggest initial public offering of the year.

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The euro fluctuated with money markets pricing in a two-thirds chance of another increase at the European Central Bank’s meeting. Crude climbed after a report from the International Energy Agency added to warnings of a supply shortfall. Stocks in Europe gained 0.5% as mining companies rallied after China announced another stimulus measure.

Soaring global oil prices are exacerbating persistent cost pressures in Europe even as economic growth flounders. By contrast, Wednesday’s US inflation report was in line with estimates, fanning hopes the Federal Reserve will pause rate hikes.

“The market is split on the ECB right now and we have to acknowledge the hawkish shift in expectations over the last two weeks,” said Geoffrey Yu, senior strategist at BNY Mellon. “The risk-reward heading into the decision is not good for the euro.”

Arm will be closely watched by investors as a bellwether of big tech and a smooth debut could give a boost to a weak IPO market. The chip designer’s offering was oversubscribed more than 10 times, enabling it to price at $51 a share, the top end of the range.

The greenback weakened against most of its Group-of-10 peers and Treasury yields ticked higher.

Bridgewater Associates LP founder Ray Dalio highlighted the difficulties investors face as global central banks try to manage inflation, saying he doesn’t want to own bonds. “Temporarily right now, cash I think is good,” he told the 10th Milken Institute Asia Summit in Singapore.

Traders will get more signals on US prices and rates later on Thursday with the release of retail sale statistics.

In Asia, demand for Japanese 20-year bonds at auction was the strongest since May 2020, suggesting speculation about an end to the country’s negative interest rates has been priced in. Japan’s Nikkei 225 outperformed the region, jumping 1.4% for its biggest one-day advance since late August.

China’s central bank cut the amount of cash lenders must hold in reserve for the second time this year to bolster an economic recovery that’s struggling to rebound. The People’s Bank of China lowered the reserve requirement ratio for most banks by 25 basis points, according to a statement Thursday.

Key events this week:

  • Japan industrial production, Thursday

  • European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday

  • US retail sales, PPI, business inventories, initial jobless claims, Thursday

  • China property prices, retail sales, industrial production, Friday

  • US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 rose 0.4% as of 12:23 p.m. London time

  • S&P 500 futures rose 0.4%

  • Nasdaq 100 futures rose 0.4%

  • Futures on the Dow Jones Industrial Average rose 0.3%

  • The MSCI Asia Pacific Index rose 0.9%

  • The MSCI Emerging Markets Index rose 0.5%


  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0734

  • The Japanese yen was little changed at 147.33 per dollar

  • The offshore yuan fell 0.2% to 7.2847 per dollar

  • The British pound fell 0.2% to $1.2470


  • Bitcoin rose 0.5% to $26,346.74

  • Ether rose 1.2% to $1,623.86


  • The yield on 10-year Treasuries advanced one basis point to 4.26%

  • Germany’s 10-year yield declined two basis points to 2.63%

  • Britain’s 10-year yield declined three basis points to 4.32%


This story was produced with the assistance of Bloomberg Automation.

–With assistance from Tassia Sipahutar and Matthew Burgess.

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