Stocks climbed as traders prepared for a week packed with interest-rate decisions from major central banks. A spurt of dealmaking news boosted sentiment in the equities market.
Consumer products and auto shares led the advance in Europe, while rising US futures pointed to modest gains later on Wall Street. A gauge of Asian stocks rose.
On the M&A front, Novartis AG agreed to buy Chinook Therapeutics Inc. for as much as $3.5 billion to add two promising treatments for a rare kidney disease. Teck Resources Ltd. said it’s engaging with Glencore’s offer to buy its steelmaking coal business for cash.
In other deals, Swiss industrial company Georg Fischer AG offered to acquire Finnish plumbing-equipment manufacturer Uponor Oyj. Mike Ashley’s Frasers Group bought a stake in online electronics retailer AO World, while Thyssenkrupp AG began a long-planned initial public offering of its Nucera hydrogen unit.
A busy calendar for investors kicks off with Tuesday’s US inflation report, on the eve of the Federal Reserve’s latest policy decision. Positioning in rates markets suggests one more Fed hike, with the likelihood that the move comes next month rather than this Wednesday.
“The main focus this coming week will be on the US core CPI and thereafter the FOMC, where our economics team expects a ‘hawkish pause’ from the Fed,” Nomura Holdings Inc. analysts including Chetan Seth wrote in a note. With the market mostly pricing in a hike by July, they don’t see a negative impact for stocks beyond “any initial knee-jerk negative reaction.”
Energy stocks were the biggest laggards in European trading as oil extended losses amid persistent concerns around the demand outlook, with Goldman Sachs Group cutting its price forecast again. Miners were also weaker after iron ore slumped almost 5%, falling for the first time in nine sessions because of worries about weakness in China’s property industry.
Treasury yields rose around two basis points for both the two-year and the 10-year maturities. A Bloomberg measure of the dollar was steady. The yen and the offshore yuan slipped about 0.1% versus the greenback.
While the consensus is for the Fed to pause this week, unexpected hikes last week from the Bank of Canada and the Reserve Bank of Australia have added an extra element of uncertainty to markets. The European Central Bank is projected to lift its benchmark rate Thursday and the Bank of Japan is expected to stand pat on Friday.
Add to that the concerns over growth in China.
“The Chinese economy is really a story of a crisis of confidence right now,” Meera Pandit, global market strategist at JPMorgan Asset Management, said on Bloomberg Radio. “We really need to see lawmakers and then policymakers infuse some sort of fiscal stimulus to help that confidence story.”
Bloomberg Economics is among a minority of forecasters that see the People’s Bank of China cutting its medium-term lending facility on Thursday.
Key events this week:
- US CPI, Tuesday
- FOMC begins two-day meeting, Tuesday
- Eurozone industrial production, Wednesday
- US PPI, Wednesday
- FOMC rate decision, Wednesday
- IEA oil market report released, Wednesday
- China central bank meeting to decide on one-year policy loan rate, Thursday
- China property prices, retail sales, industrial production, Thursday
- ECB rate decision, Thursday
- US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production
- Eurozone CPI, Friday
- Japan BOJ rate decision, Friday
- US University of Michigan consumer sentiment, Friday
Some of the major moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.4% as of 8:21 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The MSCI Asia Pacific Index rose 0.2%
- The MSCI Emerging Markets Index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0753
- The Japanese yen fell 0.1% to 139.56 per dollar
- The offshore yuan fell 0.2% to 7.1569 per dollar
- The British pound was little changed at $1.2574
Cryptocurrencies
- Bitcoin fell 1.1% to $25 843.88
- Ether fell 1.7% to $1,740.58
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.76%
- Germany’s 10-year yield was little changed at 2.38%
- Britain’s 10-year yield advanced two basis points to 4.26%
Commodities
- Brent crude fell 1.3% to $73.80 a barrel
- Spot gold was little changed
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