European stock futures edged higher on Friday after the S&P 500 index closed at a record high amid optimism about a final rate cut from the Federal Reserve. Trading levels in Asia were weak as widespread markets were closed due to the Lunar New Year holiday.
Fills in the Euro Stoxx 50 index show the benchmark is poised to extend its gains after ending Friday with its third gain of the week. Led by another rally in big tech companies, the S&P 500 closed above 5,000 for the first time.
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Shares in Australia, New Zealand, India and the Philippines fell on the back of a lack of lead in the region. Markets including Japan, China, Hong Kong, Singapore, Taiwan and South Korea were all closed for holidays.
U.S. futures were little changed as investors prepared for Tuesday's release of U.S. inflation data that will help clarify the Fed's path forward.
The yen hovered near a two-month low on Friday after central bank officials said the Bank of Japan would take time to raise interest rates. Japan's currency has depreciated against all G10 countries this year.
Australian and New Zealand government bonds fell, largely mirroring the decline in US Treasuries on Friday. Due to the holiday in Japan, there was no trading of spot government bonds in Asia.
Bitcoin was little changed after earlier inching towards $49,000. This level was last seen in mid-January, when many U.S. spot ETFs began trading.
Annual U.S. inflation is expected to fall to 2.9% in January from 3.4% the previous month, according to a consensus estimate of economists surveyed by Bloomberg. This is the first time since March 2021 that it has fallen below 3%.
“High inflation is rarely contained without triggering a recession,” Ed Yardeni, president of Yardeni Research, said in a research note. “The Fed is lowering inflation toward its 2% goal while allowing the U.S. economy to fly and avoiding a hard landing.”
On Friday, the S&P 500 rose 0.6% to a new record, while the Nasdaq 100 rose 1%. Tech stocks and positive fourth-quarter profits contributed. Four out of five companies that have announced financial results so far have exceeded expectations, brightening the outlook for corporate profits.
This comes despite traders dialing back hopes for Fed policy easing after relatively hawkish comments from central bankers and economic data showing there is no immediate need for rate cuts. , U.S. stocks rose.
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Swap market pricing shows investors expect a 15% chance of a Fed rate cut in March, down from 65% the previous month. Traders now expect four 25 basis point rate cuts in 2024, down from seven rate cuts expected at the end of last year.
In commodities, oil prices fell after Iran's foreign minister said the Gaza conflict could be close to a diplomatic solution.
In Asia, data expected to be released on Monday will include reports on inflation and industrial production from India.
This week's main events:
- India CPI, Monday
- Minneapolis Fed President Neel Kashkari, Fed President Michelle Bowman and Fed President Tom Barkin speak on Monday
- ECB Executive Board Member Piero Cipollone and Chief Economist Philip Lane speak on Monday
- US Consumer Price Index, Tuesday
- UK unemployment rate, Tuesday
- Japan's producer prices, Tuesday
- UK inflation Wednesday
- Eurozone GDP, industrial production, Wednesday
- Indonesia presidential election Wednesday
- Bank of England Governor Andrew Bailey speaks on Wednesday
- ECB Executive Board member Boris Vujicic and Vice President Luis Deguindos meet
- Chicago Fed President Austan Goolsby speaks Wednesday
- Australian job information Thursday
- Japan's GDP, Thursday
- UK GDP, Thursday
- U.S. new jobless claims, retail sales, Thursday
- Central Bank of the Philippines holds interest rate meeting on Thursday
- ECB President Christine Lagarde speaks on Thursday
- Fed Director Christopher Waller speaks Thursday
- Bank of England policymakers Katherine Mann and Megan Green speak on Thursday
- U.S. housing starts, producer prices, Friday
- San Francisco Fed President Mary Daly and Fed Vice Chair for Supervision Michael Barr speak on Friday
The main movements in the market are:
stock
- S&P 500 futures were little changed as of 3:32 p.m. Tokyo time.
- Nasdaq 100 futures little changed
- Euro Stoxx50 futures rose 0.3%
currency
- Bloomberg Dollar Spot Index little changed
- The euro was almost unchanged at $1.0793.
- The Japanese yen remained almost unchanged at 149.20 yen to the dollar.
- The offshore yuan was little changed at 7.2217 yuan to the dollar.
cryptocurrency
- Bitcoin remains almost unchanged at $48/138.01
- Ether fell 0.2% to $2,499.03.
bond
- The Australian 10-year bond yield rose 3 basis points to 4.16%.
merchandise
- West Texas Intermediate crude oil fell 0.4% to $76.57 a barrel.
- Spot gold remained largely unchanged.
This article was produced in partnership with Bloomberg Automation.
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