Stocks Rise as U.S. Growth Outweighs Cautious Mood: Markets Wrap

(Bloomberg) -- Global stocks advanced with U.S. index futures as signs of a solid recovery in the world’s largest economy outweighed jitters over inflation and a faster tapering of Federal Reserve stimulus.

December contracts on the S&P 500 and Nasdaq 100 indexes rose at least 0.4% each. Treasury futures fell while the cash market remained closed for the Thanksgiving holiday. The dollar took a breather after a four-day rally. Remy Cointreau SA jumped 11% in Europe, helping the region’s benchmark rise the most in three weeks. Base metals extended a surge.

U.S. stocks proved resilient to a slew of economic data and Fed minutes on Wednesday that supported expectations for a quicker removal of stimulus by the Fed. While inflation concerns deepened, traders were in no mood to let go of opportunities to benefit from the U.S. recovery story. Rising bets not only for a quicker taper, but also an earlier liftoff of interest rates, suggest caution may return after Thanksgiving.

“The market mood is rather OK-ish after the minutes,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “At this point, it makes sense to expect an earlier, and maybe a steeper rate normalization from the Fed.”

MSCI’s global equity benchmark headed for the biggest advance since Nov. 16 as European traders shrugged off a worsening Covid-19 situation in the continent. The Stoxx 600 gauge was boosted by utilities and technology companies. Remy Cointreau soared to a record high after the French distiller reported first-half results that Citigroup Inc. called “truly exceptional.”

Action continued to be hot in the base metals market. Nickel extended gains to trade near the highest level in almost a month, as shrinking inventories pointed to tight supply. Aluminum and copper extended their two-day increase to at least 2% each.

The dollar slipped, still heading for its fifth weekly rally. Multiple technical patterns, including Fibonacci Retracement, support fundamental drivers helping the currency such as a winding down of excess liquidity in the global markets and concern over a persistent pandemic.

MSCI Inc.’s Asia-Pacific share index snapped a three-day drop. China urged local governments to boost investment to counter a growth slowdown, while the Chinese city of Chengdu sought to ease a cash crunch at property developers. It became the first major local administration to address the liquidity squeeze in the real estate industry, a key component of the economy.

Elsewhere, South Korea followed New Zealand in raising interest rates to contain inflation. The won fell amid an uncertain time line for the next hike.

Crude oil was steady after OPEC said a planned coordinated release of reserves by major consuming nations may swell a crude surplus expected early next year.

For more market analysis, read our MLIV blog.

Here are some key events this week:

• U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday
• Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.4% as of 8:55 a.m. London time
• Futures on the Nasdaq 100 rose 0.4%
• Futures on the Dow Jones Industrial Average rose 0.3%
• The MSCI Asia Pacific Index rose 0.2%
• The MSCI Emerging Markets Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.1223
• The Japanese yen was little changed at 115.32 per dollar
• The offshore yuan rose 0.1% to 6.3891 per dollar
• The British pound rose 0.1% to $1.3344

Bonds

• Germany’s 10-year yield declined one basis point to -0.24%
• Britain’s 10-year yield was little changed at 1.00%

Commodities

• Brent crude was little changed
• Spot gold rose 0.3% to $1,794.72 an ounce

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