Stocks Rise as Fed Hike Bets Ease, Dollar Steadies: Markets Wrap

(Bloomberg) — Global stocks extended their advance as easing bets on a Federal Reserve interest-rate hike this month lifted sentiment. The dollar steadied after sliding to a four-month low, while the yen pared some of its two-day surge.

MSCI’s Asia Pacific equities gauge climbed 1%, sending the All Country World Index — the broadest measure of global stocks — higher for a third day. The gains followed a rally on Wall Street spurred by Fed Governor Christopher Waller’s comments that he would support keeping rates steady if price pressures continued to ease.

Swaps priced roughly even odds of a quarter-point hike in September, down from about 70% earlier this week. Treasuries and gold held their gains from the New York session. A Bloomberg gauge of the dollar was little changed ahead of Friday’s US jobs data, after falling to its lowest since May.

Attention in Asia was once again on the yen, which strengthened about 2% Thursday, reversing a month of gradual decline. Traders lifted bets on Bank of Japan rate hikes and remained vigilant to the risk of official action to further boost the currency. The yen pared some gains, trading at about 156.30 per dollar, having strengthened to as much as 155.30 in the prior session.

Stocks and bonds drew support from Waller’s comments after yields surged globally to multi-decade highs earlier this week, as rising oil prices and Chair Kevin Warsh’s hawkish stance fueled expectations for a Fed rate hike. The rout also reflected demands for greater compensation amid years of heavy government spending, persistent price pressures and a wave of corporate borrowing to finance the artificial-intelligence buildout.

The comments “are very meaningful because they might have changed the or tilted the balance of next Fed policy decision,” Suresh Tantia, UBS Global Wealth Management Head CIO Asia Equity Strategy, said on Bloomberg TV. “At this point of time we are watching two key things, one is the nonfarm payrolls data coming on Friday, and the next inflation data. They are likely to decide whether Fed moves in the next meeting or not.”

In other corners of the market, Brent crude steadied around $95.55 a barrel. The commodity is headed for its biggest weekly gain since July as renewed US-Iran hostilities heightened concerns about prolonged disruptions to energy flows through the Strait of Hormuz.

Futures contracts for the Nasdaq 100 Index climbed 0.2%, while European shares were set for a modest gain.

An index of Asian currencies climbed to levels last seen in October 2024. Japan’s super-long bond yields fell amid speculation that the nation’s pension funds may buy more domestic debt.

The rate-sensitive two-year Treasury yield held at 4.34% after declining in the previous session following the Fed governor’s remarks.

Waller said he was willing to support “holding the policy rate” at its current level if inflation continued moving toward the Fed’s 2% target. That gauge — the price index for the personal consumption expenditures component of US GDP — was 3.7% in July, down from 4.1% in May. Attention now turns to Friday’s nonfarm payrolls report.

There are a lot of uncertainties confronting the market with just about two weeks to go for the Fed meeting and about two months from mid-term elections in the US, Aidan Yao, a senior investment strategist at Amundi Investment Institute, said on Bloomberg TV.

“My personal assessment is that maybe the downside is a little bit greater than upside, so I think it pays to take a more cautious posture,” he said.

Corporate Highlights:

Volkswagen AG’s supervisory board backed a sweeping overhaul that calls for 50,000 additional job cuts, far fewer models and a smaller industrial footprint. Anthropic PBC is set to finalize an expansion of its revolving credit facility to $15 billion, according to people familiar with the matter. Lululemon Athletica Inc. lowered its full-year outlook for a second straight quarter OpenAI is releasing a new generation of its technology called GPT-6 that the company is positioning as a key milestone in a push to build so-called artificial general intelligence. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 6:51 a.m. London time Nasdaq 100 futures rose 0.2% The MSCI Asia Pacific Index rose 1% The MSCI Emerging Markets Index rose 1.4% Japan’s Topix rose 0.2% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng rose 1.9% The Shanghai Composite rose 0.2% Euro Stoxx 50 futures were little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1625 The Japanese yen fell 0.4% to 156.40 per dollar The offshore yuan was little changed at 6.7153 per dollar The British pound was little changed at $1.3533 Cryptocurrencies

Bitcoin fell 0.7% to $80,887.73 Ether was little changed at $2,504.91 Bonds

The yield on 10-year Treasuries declined one basis point to 4.76% Japan’s 10-year yield declined 6.5 basis points to 2.900% Australia’s 10-year yield was little changed at 5.17% Commodities

Spot gold was little changed West Texas Intermediate crude rose 0.4% to $91.67 a barrel This story was produced with the assistance of Bloomberg Automation.

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