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Europe Stock Futures Rise Ahead of Rate Decisions: Markets Wrap

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(Bloomberg) — European stocks are set to rise at the open as traders await the monetary policy decisions of three central banks.

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Euro Stoxx 50 future contracts rose 0.3% after the region’s benchmark slipped in the previous session. Policymakers in Switzerland are set to kick-start a busy day of interest rate announcements, with economists expecting a close call on whether officials will ease policy or stay on hold.

Later on, Norges Bank and the Bank of England are expected to keep their respective interest rates unchanged.

In Asia, a two-day rally paused with a gauge of technology firms in Hong Kong sliding over 1.5%. US contracts also strengthened, signaling gains on Wall Street when it reopens after a public holiday.

A Bloomberg index of dollar strength was little changed. US Treasury and Australian bond yields edged higher, following a rise in their European peers. The Japanese yen extended its weakness against the dollar to the sixth session.

The offshore yuan slipped to its weakest level this year on signs that policymakers are loosening their grip on the currency. The People’s Bank of China set the yuan’s daily reference rate at its lowest since November.

Chinese bonds were in focus after PBOC Governor Pan Gongsheng gave the clearest indication yet that the central bank would start trading government bonds on the secondary market. The country’s 10-year government bond futures rose to a record high.

The New Zealand government bond yields advanced after the nation’s economy exited a recession with modest expansion in the first quarter. Gross domestic product gained 0.2% from the previous quarter, beating economist estimates of 0.1% growth.

Despite Thursday’s tepid moves, MSCI’s gauge of Asian stocks is trading near its highest since March 2022. Wall Street, meanwhile, has been lifted by the continued AI frenzy and resilient economic growth that should continue to support corporate earnings, especially in the technology sector.

Questions are rising on what could derail the stock rally given “all is not so rosy under the hood, where index market breadth has been poor, with participation underwhelming, suggesting the rally has been built on a shaky foundation,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “It has simply been a tough trade to bet against AI in its various guises – so until we lose these behemoths then pullbacks at an index level will likely be shallow and well-supported.”

In corporate news, shares of Guzman y Gomez Ltd., a Mexican-themed fast-food chain, jumped as much as 38% in its trading debut in Australia following the country’s largest initial public offering in almost a year.

In commodities, oil lost ground ahead of the release of weekly inventory data from the US that may show another rise in nationwide crude inventories. Gold edged higher after closing the previous session little changed.

Key events this week:

  • Eurozone consumer confidence, Thursday

  • UK BOE rate decision, Thursday

  • US housing starts, initial jobless claims, Thursday

  • Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday

  • US existing home sales, Conf. Board leading index, Friday

  • Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.3% as of 7:31 a.m. London time

  • Nasdaq 100 futures rose 0.6%

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index fell 0.1%

  • The MSCI Emerging Markets Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0735

  • The Japanese yen was little changed at 158.19 per dollar

  • The offshore yuan was little changed at 7.2836 per dollar

  • The British pound fell 0.1% to $1.2707

Cryptocurrencies

  • Bitcoin rose 1% to $65,510.98

  • Ether rose 0.9% to $3,584.12

Bonds

  • The yield on 10-year Treasuries advanced three basis points to 4.25%

  • Germany’s 10-year yield advanced two basis points to 2.42%

  • Britain’s 10-year yield advanced two basis points to 4.07%

Commodities

  • Brent crude was little changed

  • Spot gold rose 0.7% to $2,344.44 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

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