(Bloomberg) — Stocks rose, with investors in a more optimistic mood after the House passed a deal to avert a US default and Federal Reserve officials hinted at a pause in interest-rate hikes.
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Miners and media companies led gains as European equities looked to snap three days of declines. The advance echoed a move higher in Asian stocks, where markets got an initial boost from some encouraging economic data out of China.
Passage of the deal struck by House Speaker Kevin McCarthy and President Joe Biden means the bill will be sent to the Senate days before the June 5 default deadline. The signs of optimism were helped along by comments from Fed officials who backed the possibility of holding rates unchanged the next meeting.
European investors have a busy day of data releases to process to gauge the outlook for monetary policy, including euro zone manufacturing and inflation figures. European Central Bank president Christine Lagarde will speak at a conference Thursday. The ECB won’t contemplate lowering borrowing costs before core consumer-price growth slows in a continuous manner, Governing Council member Olli Rehn said in a speech in Tokyo.
A modest gain in S&P 500 futures came after a 0.6% loss for the benchmark on Wednesday that left the index clinging to a small gain for May, its third monthly advance. The Nasdaq 100 index fell 0.7% Wednesday, weighed by a decline in Nvidia Corp. shares after a rapid rally that has nearly tripled the stock price this year.
Corporate earnings were again in focus. Shares in Salesforce Inc. tumbled around 6% in after-hours trading following a dim outlook for sales while Hewlett Packard Enterprise Co. fell 7.1% Wednesday on slimmer revenue projections than anticipated.
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Treasuries dropped, largely reversing a rally in the previous session. The dollar was in a tight range against most major currencies.
Hopes for a Fed pause were partly pared back after Wednesday’s JOLTS jobs report for April showed more than 10 million openings, the highest in three months and above consensus estimates.
But Fed Governor Philip Jefferson said the central bank is inclined to keep interest rates steady in June to assess the economic outlook. His remarks were echoed by Philadelphia Fed President Patrick Harker, who said, “I think we can take a bit of a skip for a meeting.”
Focus turns next to US jobless claims data due later Thursday, before Friday’s nonfarm payrolls.
Gains in Chinese stocks Thursday faded as investors studied mixed readings on the country’s manufacturing activity. Caixin manufacturing data for May showed an expansion, exceeding forecasts for a small contraction. The numbers followed official figures Wednesday that showed a further contraction in activity.
For the Chinese economy “things are not getting worse outside of the growth momentum — but it’s not getting better,” Wendy Liu, chief Asia and China equity strategist for JPMorgan Chase & Co., said in an interview with Bloomberg Television. However, the economy will be “firmly in recovery in the second half,” she added.
Elsewhere, West Texas Intermediate and Brent crude futures rose after two days of declines.
Key events this week:
Eurozone HCOB Eurozone Manufacturing PMI, CPI, unemployment, Thursday
US construction spending, initial jobless claims, ISM Manufacturing, Thursday
ECB President Christine Lagarde speaks at conference, Thursday
Fed’s Patrick Harker speaks at webinar, Thursday
US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.7% as of 8:17 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.4%
The MSCI Emerging Markets Index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0679
The Japanese yen fell 0.3% to 139.79 per dollar
The offshore yuan fell 0.1% to 7.1276 per dollar
The British pound fell 0.1% to $1.2423
Cryptocurrencies
Bitcoin fell 1.1% to $26,807.98
Ether fell 0.7% to $1,853.27
Bonds
The yield on 10-year Treasuries advanced four basis points to 3.68%
Germany’s 10-year yield advanced two basis points to 2.30%
Britain’s 10-year yield advanced two basis points to 4.20%
Commodities
Brent crude rose 0.8% to $73.16 a barrel
Spot gold fell 0.2% to $1,958.36 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joanna Ossinger.
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