US Futures Near Record Highs Before Burst of Data: Markets Wrap

(Bloomberg) — US stocks were set to open near the record levels set Tuesday amid optimism over prospects for interest-rate cuts. European markets took heart from Wall Street’s latest all-time highs and efforts to block a right-wing majority in French elections.

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Futures contracts for US equities were steady before a session that will end at 1 p.m. because of the July 4 holiday. The S&P 500 closed above 5,500 for the first time Tuesday, notching its 32nd record this year.

Later, investors will parse US initial jobless claims and ADP employment data among other readings on the economy for more clues on the policy outlook. Federal Reserve Chair Jerome Powell acknowledged Tuesday that the central bank has made “quite a bit of progress” in reducing inflation but emphasized officials need more evidence before lowering rates.

“We are in a situation where momentum in the US equity market is still strong, we are seeing inflation tick lower and increasing odds of a Fed cut in September, all of which should be sufficient to keep the rally going,” said Guy Miller, chief market strategist at Zurich Insurance Co.

A global MSCI Inc. index measuring both developed and emerging markets is at a record high, evidence of the broadly positive sentiment toward stocks. The S&P 500 has added more than $16 trillion in value from a closing low in October 2022, thanks to solid earnings, the craze over artificial intelligence and expectations of lower borrowing costs.

In Europe, much of the spotlight continues to be on politics, on the eve of elections in the UK. In France, the benchmark CAC 40 index rallied 1.6% as anti-National Rally parties attempt to prevent Marine Le Pen’s far-right group from achieving an absolute majority in the final round of legislative voting on Sunday. Europe’s regional Stoxx 600 index advanced 0.9%, led by technology stocks.

In individual stock moves, Paramount Global jumped 10% in US premarket trading after Bloomberg News reported that Skydance Media had reached a preliminary agreement to buy National Amusements Inc. and merge with Paramount. Shares of BE Semiconductor Industries NV soared 9.1% in Amsterdam after analysts wrote that Apple Inc. could adopt the Dutch chip-equipment firm’s technology as soon as next year.

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Markets are also gearing up for the all-important US payrolls reading due Friday. Economists expect the report to show employers added about 190,000 workers in June and the unemployment rate likely held at 4%. The dollar and Treasuries were little changed.

“There are clear signs the US economy and labor markets are slowing and that should be confirmed by Friday’s payrolls data, laying the path for the Fed to cut in September,” Zurich Insurance’s Miller said.

Still, recent European political turmoil has posed risks to the positive view on equity markets. Data show that as the French snap election jolted markets, hedge funds sold the region’s stocks. The move was driven by both long positions being unwound and short positions being added in roughly equal amounts, according to Goldman Sachs Group Inc.’s prime brokerage desk.

Europe suffered the biggest reduction in overweight positions among regions globally in June, reversing the buying trend seen in May, Goldman said. Funds cut the most exposure to financial stocks, particularly banks, with net selling for that sector the largest since November 2021.

Key events this week:

• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday

• US Fed minutes, ADP employment, ISM Services, factory orders, initial jobless claims, durable goods, Wednesday

• Fed’s John Williams speaks, Wednesday

• UK general election, Thursday

• US Independence Day holiday, Thursday

• Eurozone retail sales, Friday

• US jobs report, Friday

• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 7:04 a.m. New York time

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average rose 0.1%

• The Stoxx Europe 600 rose 0.9%

• The MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.0761

• The British pound rose 0.1% to $1.2702

• The Japanese yen fell 0.3% to 161.95 per dollar

Cryptocurrencies

• Bitcoin fell 2.8% to $60,210.05

• Ether fell 3.2% to $3,304.6

Bonds

• The yield on 10-year Treasuries was little changed at 4.43%

• Germany’s 10-year yield advanced three basis points to 2.63%

• Britain’s 10-year yield declined two basis points to 4.23%

Commodities

• West Texas Intermediate crude was little changed

• Spot gold rose 0.7% to $2,346.16 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sagarika Jaisinghani and Winnie Hsu.

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