(Bloomberg) — A wave of data fueling hopes that the U.S. will avoid a recession put U.S. stocks on course for their strongest week of the year.
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The latest readings, from inflation to jobless claims and retail sales, have reassured investors and supported the belief that the world’s largest economy is heading for a “Goldilocks” scenario. The S&P 500 has rallied 3.7% this week, while the tech-heavy Nasdaq 100 is up more than 5%, the biggest gain for both indexes since November.
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Chris Weston, head of research at Pepperstone Group Ltd., said: “There is now little in the way of data that tracks sentiment in near-instant time.
Stock markets around the world largely erased last week’s losses as traders worried the Federal Reserve would not cut interest rates fast enough to achieve a soft landing in the US economy. In Europe on Friday, the Stoxx 600 index added 0.4% as it headed for its best week since May. US stock futures rose.
Friday’s gains were stronger in Asia, where stocks went for their best weekly performance in a year, boosting earnings prospects for exporters led by a weaker yen led by Japan. The currency is set for its sharpest weekly drop since May after falling 1.3% against the dollar on Thursday. It was at the 149 level, easing fears of a big carry trade.
“Asian equities are enjoying an impressive run today thanks to a renewed sense of ‘perfect balance’ thanks to recent well-anticipated economic releases,” said Hebei Chen, analyst at IG Markets Ltd. Still a strong recovery with no sign of slowing.”
Treasuries were flat after Thursday’s slide, as evidence of U.S. economic strength prompted traders to back off the race for a jumbo September rate cut. A 25 basis point cut by the central bank is expected to ease over 90 basis points by the end of 2024.
In individual stock moves on Friday, Bayer AG shares rose more than 7% following a significant win for the German company in long-running cancer cases over its Roundup herbicide.
Wall Street’s latest gains saw the S&P 500 hit its strongest six-day winning streak since November 2022. U.S. stocks posted a seventh straight week of gains, underscoring steady interest in stocks among investors, Bank of America Corp said. About $5.5 billion went into U.S. equity funds in the week to Aug. 14, BofA said, citing EPFR Global data.
US officials are trying to use higher rates to reduce inflation without shrinking the economy. Alberto Musallem, president of the Fed Bank of St. Louis, said the time was right to cut interest rates. His Atlanta counterpart Rafael Bostick told the Financial Times he was “open” to a cut in September.
“A soft landing is no longer a hope. It’s becoming a reality,” said David Russell at Trade Station. “These numbers suggest that recent market volatility is not really a growth scare. It’s a normal summer season amplified by moves in the currency market.”
Among commodities, gold was on track for a small weekly gain. Oil fell as the market weighed strong U.S. economic data and a possible strike against Iran or its proxies against a subdued Chinese demand outlook for Israel.
Highlights of this week:
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U.S. Housing Starts, University of Michigan Consumer Sentiment, Friday
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The central bank’s Austin Goolsbee speaks on Friday
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Housing Canada starts Friday
Some key movements in the markets:
Shares
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The Stoxx Europe 600 was up 0.3% as of 9:36 a.m. London time.
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.2%
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Futures for the Dow Jones industrial average rose 0.1%
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The MSCI Asia Pacific index rose 2.3%
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The MSCI emerging market index rose 1.6%
Coins
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.1% to $1.0987
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The Japanese yen rose 0.4% to 148.68 per dollar
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The offshore yuan was up 0.1% at 7.1704 per dollar
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The British pound was up 0.3% at $1.2888
Cryptocurrencies
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Bitcoin rose 3% to $58,381.51
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Ether rose 2.5% to $2,613.65
Bonds
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The yield on 10-year Treasuries fell a basis point to 3.90%
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Germany’s 10-year yield fell one basis point to 2.25%.
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Britain’s 10-year yield fell one basis point to 3.91%.
materials
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Brent crude fell 0.6% to $80.56 a barrel
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Spot gold rose 0.2% to $2,462.12 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Winnie Hsu, Richard Henderson, Robert Brand, and Sakharika Jaisinghani.
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