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European Stocks Gain Ahead of Powell Comments: Markets Wrap

(Bloomberg) — European stocks advanced and US Treasuries traded little changed before comments from Federal Reserve Chair Jerome Powell that may offer clues about the path of interest rates.

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The Stoxx 600 index climbed 0.4% while futures on the Nasdaq slipped. US Treasuries were steady and the dollar edged lower against most of its developed-nation peers. Crude prices fell even as the OPEC+ group of petroleum producing nations agreed to a supply cutback — a sign traders are skeptical it will be implemented.

Investors are pondering whether November’s scorching gains across asset classes can go further. Some suggest optimistic market wagers on the timing of interest-rate cuts next year read too much into recent comments by Fed speakers. Powell is set to speak at Spelman College in Atlanta on Friday, while euro-zone manufacturing data may add to the case for the European Central Bank to lower borrowing costs.

“Data prints seem to highlight that the US economy may be slowing down,” OCBC analysts including Selena Ling said a note. “Cooler demand may reinforce the notion that the Fed is likely done tightening for the current cycle and help build expectations for the Fed to start cutting rates” in the second quarter.

US statistics on Thursday showed a key measure of inflation eased in October, adding to the case for an end to the Fed’s tightening and bolstering the narrative that lifted markets globally last month.

The S&P 500 had one of its strongest Novembers on record, while the MSCI All Country World Index saw its third-largest monthly gain in the past decade. The Bloomberg Dollar Spot Index dropped by the most in a year, while US Treasury yields tumbled about 60 basis points in the month.

“Almost everyone was offsides coming into November,” said Ryan Detrick, chief market strategist at Carson Group. “There’s still a big opportunity for traders to chase gains in December, too.”

OPEC+ Uncertainty

Brent crude for February traded under $81 a barrel, following an OPEC+ meeting that promised roughly 900,000 barrels a day of fresh output cuts from January, but was hazy on the details. Gold was on track for a third weekly gain.

In Asia, The MSCI Asia-Pacific stock index fell as much as 0.5%. Chinese shares pared losses following a report that an unidentified state institution bought exchange-traded funds, in what could be the latest effort to bolster markets.

Key events this week:

  • Eurozone S&P Global Manufacturing PMI, Friday

  • US construction spending, ISM Manufacturing, Friday

  • Fed Chair Jerome Powell to participate in “fireside chat” in Atlanta, Friday

  • Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.4% as of 8:08 a.m. London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures fell 0.1%

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index fell 0.4%

  • The MSCI Emerging Markets Index fell 0.6%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.1% to $1.0899

  • The Japanese yen was little changed at 148.21 per dollar

  • The offshore yuan was little changed at 7.1509 per dollar

  • The British pound was little changed at $1.2636

Cryptocurrencies

  • Bitcoin rose 1.5% to $38,302.78

  • Ether rose 2.5% to $2,096.9

Bonds

  • The yield on 10-year Treasuries was little changed at 4.33%

  • Germany’s 10-year yield was little changed at 2.45%

  • Britain’s 10-year yield advanced one basis point to 4.19%

Commodities

  • Brent crude fell 0.2% to $80.67 a barrel

  • Spot gold rose 0.2% to $2,040.46 an ounce

This story was produced with the assistance of Bloomberg Automation.

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