European stocks rose with US equity futures on Thursday as traders bid up cyclical shares on signs of economic optimism. Asian shares dipped as Covid-19 flareups threaten to hamper the recovery there.
The Stoxx 600 Index climbed alongside contracts on the S&P 500 after both gauges completed one of their best first-half showings in more than two decades. Energy firms and banks led in Europe, while travel shares got a lift from a report that the UK plans to ease rules. Contracts on the small-cap Russell 2000 Index rose 0.5%.
In Asia, most major equity markets posted modest declines after purchasing managers’ indexes suggested curbs imposed to fight the virus had sapped output in parts of the region.
The dollar strengthened after its best month since March 2020 and Treasuries were little changed. The payrolls report due Friday will provide a gauge of economic progress, helping to shape expectations of when the Federal Reserve might start tapering stimulus. Oil climbed ahead of a meeting between OPEC+ producers on output policy and as a stalemate in Iranian nuclear talks drags on.
Risk assets are starting the second half on the front foot, even as they face challenges from Covid-19 variants and the prospect of diminishing monetary policy support amid inflation pressures. That’s leading to predictions of a pickup in volatility and stirring questions about whether bets tied to economic reopening — such as on cyclical stocks and higher longer-term Treasury yields — will prosper.
“What we’re seeing at the moment is markets coming to the realisation that they have to discount the risk — the high probability I really should say — that the Covid-19 virus will be with us for the foreseeable future,” Kyle Rodda, an analyst at IG Markets, said on Bloomberg Television. He added investors will reward countries with adequate vaccine capacity, helping to explain some of the strength of US and European stocks relative to Asian equities.
Here are some events to watch in the markets this week:
- OPEC+ ministerial meeting Thursday
- ECB President Christine Lagarde speaks Friday
- The US jobs report is due Friday
These are some of the main moves in markets:
- The Stoxx Europe 600 rose 0.8% as of 9:48 a.m. London time
- Futures on the S&P 500 rose 0.3%
- Futures on the Nasdaq 100 rose 0.1%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The MSCI Asia Pacific Index fell 0.4%
- The MSCI Emerging Markets Index fell 0.2%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.1% to $1.1843
- The Japanese yen fell 0.2% to 111.37 per dollar
- The offshore yuan was little changed at 6.4675 per dollar
- The British pound fell 0.3% to $1.3796
- The yield on 10-year Treasuries was little changed at 1.47%
- Germany’s 10-year yield advanced one basis point to -0.19%
- Britain’s 10-year yield advanced one basis point to 0.73%
- Brent crude rose 1.4% to $75.63 a barrel
- Spot gold rose 0.3% to $1 774.79 an ounce