(Bloomberg) — Global stocks rallied after China pledged fiscal stimulus and traders raised their bets on interest-rate cuts by major central banks.
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Futures on the S&P 500 climbed 0.8% as US-listed China stocks advanced and Micron Technology Inc. surged in premarket trading. Contracts on the Nasdaq 100 jumped 1.5% and the Stoxx 600 index in Europe headed for a record close. Treasury yields and the dollar edged lower.
The promises by China’s Politburo, alongside growing expectations that the Federal Reserve and European Central Bank will push ahead with easing, buoyed markets on Thursday. Traders are waiting for a pre-recorded address by Federal Reserve Chair Jerome Powell and jobs data later Thursday.
“The message, over the last 10 days or so, from monetary and fiscal policymakers across the globe, has been clear and undeniable — the policy ‘put’ is well and truly back,” said Michael Brown, a strategist at Pepperstone Group Ltd. “The path of least resistance is likely to continue to lead to the upside, over both the short- and medium-term.”
Money markets have flipped to favor a half-point cut by the Fed in November, with traders now pricing almost 39 basis points of reductions after lackluster US consumer data earlier in the week.
The US central bank’s preferred price metric and a snapshot of consumer demand will give more clues on the economy’s health on Friday.
“The Federal Reserve is more concerned about growth than they let on,” said Vanguard Chief Economist Joe Davis on Bloomberg TV. “Our view is they are going to be more aggressive in the near term.”
China Doubts
The bid to revive growth by China’s top leaders on Thursday added to a slew of measures from Beijing this week that have supercharged local assets. The CSI 300 Index is headed for its biggest weekly gain in almost a decade.
But questions remain over the long-term impact of the measures.
“I wouldn’t be surprised if tomorrow we are going to see a bit of a pullback,” Helen Jewell, chief investment officer at BlackRock Fundamental Equities EMEA, told Bloomberg TV. “This is what is happening in the markets right now — you end up risk on one day, risk off the next day. The Chinese economy is still very fragile.”
Swiss Cut
Elsewhere, the Swiss National Bank made a 25 basis-point interest rate cut in an effort to contain the strength of the Swiss franc, which has had the strongest rally in nearly a decade.
In commodities, oil fell for a second day as Saudi Arabia was reported to be weighing increasing output, and factions in Libya reached a deal that opens the way to the return of some crude production.
Israel ordered the military to maintain its bombardment of Hezbollah targets in Lebanon and denied interest in a truce deal, complicating efforts by the US and allies to avoid full-blown war.
Key events this week:
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ECB President Christine Lagarde speaks, Thursday
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US jobless claims, durable goods, revised GDP, Thursday
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Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
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China industrial profits, Friday
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Eurozone consumer confidence, Friday
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US PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.8% as of 7:48 a.m. New York time
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Nasdaq 100 futures rose 1.5%
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Futures on the Dow Jones Industrial Average rose 0.4%
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The Stoxx Europe 600 rose 1.1%
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The MSCI World Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.2% to $1.1155
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The British pound rose 0.4% to $1.3376
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The Japanese yen rose 0.4% to 144.21 per dollar
Cryptocurrencies
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Bitcoin rose 1.4% to $64,371.46
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Ether rose 1.9% to $2,628.45
Bonds
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The yield on 10-year Treasuries declined two basis points to 3.77%
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Germany’s 10-year yield declined four basis points to 2.14%
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Britain’s 10-year yield was little changed at 3.98%
Commodities
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West Texas Intermediate crude fell 2.8% to $67.72 a barrel
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Spot gold rose 1% to $2,683.96 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu, Divya Patil, Richard Henderson, Ben Priechenfried and James Hirai.
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