European stocks extend year-end global rally: Markets wrap up

(Bloomberg) — European shares extended a rally seen in Asian markets and across Wall Street as investors braced for Federal Reserve interest rate cuts next year. Gold prices traded at record highs earlier this month.

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The Stoxx Europe 600 index rose 0.3% for the fourth straight session after a gauge of Asian stocks. The European benchmark is at its highest level since January 2022 after adding 13% this year. US stock futures also pointed to an extension of Wednesday's gains on Wall Street.

Bonds were steady after Wednesday's strong gains, which saw yields on five- to 30-year Treasuries fall at least 10 basis points and Germany's 10-year yield fell to a new 2023. The gains pushed a global gauge of the stock market to the top of its best two-month rally.

Expectations of aggressive policy easing are at the forefront, said Vishnu Varadhan, head of economics and strategy at Mizuho Bank Ltd in Singapore. “The ferocity of the bond market rally has actually boosted total returns for investors — the markets are signaling that we're halfway back to easy monetary policy,” he said.

Gains in Asia were led by Chinese stocks, which posted their best day in four months, boosted by a turnaround in some of 2023's worst-performing sectors. Shares in Hong Kong, India and Australia also rose.

A gauge of global stocks is on pace for its highest close since February 2022, reflecting traders' hopes for interest rate cuts next year. Traders are betting on central bank rate cuts as early as March, according to central bank swap pricing. Jobs data later on Thursday could provide more clarity on the outlook for the economy and interest rates.

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Bonds' gains were helped by bumper demand for five-year Treasury notes, which followed strong appetite for two-year bids earlier in the day. The strong appetite for the notes is a sign that investors are looking for attractive yields ahead of expected Fed tapering. The dollar fell against all its Group-of-10 peers, with the greenback on track for a fifth straight day of decline.

In Asia, the yen gained for a second day after Bank of Japan Governor Kazuo Ueda set the stage for the country's first interest rate hike since 2007.

China's CSI 300 index headed for its first weekly gain since early November, with technology and renewable energy stocks contributing heavily to Thursday's rally.

Gold neared a record high, while oil was steady amid signs of a build-up in U.S. stockpiles. Bitcoin rallied, trading above $43,000 amid renewed speculation that the US Securities and Exchange Commission is moving closer to approving an exchange-traded fund that invests directly in the giant token.

Highlights of this week:

  • US Total Inventories, Initial Jobless Claims, Thursday

  • UK nationwide house prices, Friday

Some key movements in the markets:

Shares

  • The Stoxx Europe 600 was up 0.3% as of 8:09 a.m. London time.

  • S&P 500 futures rose 0.1%

  • Nasdaq 100 futures rose 0.2%

  • The future of the Dow Jones Industrial Average was little changed

  • The MSCI Asia Pacific index rose 1.3%

  • The MSCI emerging market index rose 1.3%

Coins

  • The Bloomberg Dollar Spot Index fell 0.3%

  • The euro was little changed at $1.1115

  • The Japanese yen rose 0.7% to 140.80 per dollar

  • The offshore yuan was up 0.6% at 7.1063 per dollar

  • The British pound was up 0.1% at $1.2813

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Cryptocurrencies

  • Bitcoin fell 0.9% to $42,994.18

  • Ether rose 0.5% to $2,373.74

Bonds

  • The yield on 10-year Treasuries edged up a basis point to 3.81%

  • Germany's 10-year yield rose one basis point to 1.91%

  • Britain's 10-year yield rose two basis points to 3.46%

materials

  • Brent crude was little changed

  • Spot gold rose 0.3% to $2,084.52 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Ruth Carson and Richard Henderson.

(An earlier version corrected the first paragraph to show gold trading near a record)

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