Nell McKenzie and Ray V
LONDON (Reuters) – U.S. stocks are likely to open higher on renewed bets that the Federal Reserve is likely to cut interest rates this year, while the yen weakened after jumping strongly last week due to Tokyo’s proposed currency intervention.
Futures remained buoyant, gaining 0.3%, and Nasdaq futures rose 0.2% each, a positive sign for Wall Street to open later after Friday’s US non-farm payrolls report revived hopes of a soft landing for the US economy. .
They also confirmed speculation that the Fed’s rate cut is likely to happen this year, after Chairman Jerome Powell last week also supported the central bank’s easing trend.
“(The) data suggests the labor market is still tight, but not as hot as it was a year or two ago,” Wells Fargo economists said. “This should help inflation slow further throughout the year, even if the improvement is gradual.”
Traders will also be closely watching whether the S&P rises above its 50-day moving average of 5130 on Monday, an important price point for the S&P, said Florian Ielpo, head of macro at Lombard Odier Investment Managers.
“If we break through this level, we will continue to see an uptrend to new highs, but if it is missed, it could take a couple of days or even weeks to get back to these levels,” Ielpo said.
The dollar remained broadly stable on Monday, leaving the euro off a one-month high in last trade at $1.0771, while sterling was up 0.2% to last buy $1.2575. [FRX/]
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In Europe, Goldman Sachs raised its 2024 earnings per share growth forecast for companies in the STOXX 600 index to 6% from 3% previously, the bank said in a statement on Friday.
According to Goldman, a 10% annual price increase adds about 2.5 percentage points. (percentage points) to annual earnings per share growth, and a 10% decline in the euro/dollar exchange rate adds about the same.
Markets in mainland China and Europe were off to a bullish start due to the holidays in the UK and Japan, also enjoying the rays of renewed optimism in the US.
Europe’s broadest stock index was up 0.7% by 12:45 BST.
Oil prices were also in focus due to the prospect of higher prices in Saudi Arabia and rising tensions in the Middle East, with Brent futures up 73 cents at $83.69 a barrel and futures up 81 cents at $78.92 a barrel. .[O/R]
On Monday, the Israeli military called on Palestinian civilians to evacuate Rafah in a “limited scope” operation, but did not immediately confirm media reports that it was part of preparations for a ground attack.
MSCI’s broadest index of Asia-Pacific shares outside Japan hit its highest level since February 2023 and was last up 0.7%, while China’s blue-chip index closed 1.5% higher.
The Hong Kong stock market rose 4.7% last week and on Friday posted its longest daily winning streak since 2018, closing 0.55% higher on Monday.
The rebound in Chinese markets followed a meeting of the country’s Politburo, where policymakers said they would step up support for the economy through prudent monetary and active fiscal policies.
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The long-awaited recovery of the Chinese economy is also gaining momentum. Data on Monday showed that growth in the country’s services sector activity slowed slightly amid rising costs, but new orders growth accelerated and business sentiment rose.
Intervention
Elsewhere, traders remain wary of further yen volatility following episodes last week of alleged intervention by Japanese authorities to stem the currency’s sharp decline.
Tokyo is suspected of spending more than 9 trillion yen ($59 billion) last week to prop up its currency, Bank of Japan data showed, pushing the yen from a 34-year low of 160.245 to the dollar to about a month level. maximum 151.86 for the week.
The yen gave back some of those gains on Monday and was last down 0.5% at 153.765 per dollar after briefly weakening from as high as 154 earlier in the session.
Gold rose 0.6% to $2.316 an ounce. [GOL/]
($1 = 153.5700 yen)