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Europe shares extend retreat from losing streak: Markets Wrap




(Bloomberg) — European stocks opened stronger, while U.S. stock futures were pressured by reports of new curbs on artificial intelligence chip sales to China.

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The Stoxx Europe 600 index rose as much as 0.5% as shares snapped from a six-day losing streak that ended on Tuesday. UBS Group AG advanced as the company prepared to cut more than half of Credit Suisse Group AG’s workforce.

European technology firms shrugged off a Wall Street Journal report that said Washington was considering restrictions on chips made by Nvidia Corp. and other companies to China. The news knocked shares of Nvidia and Advanced Micro Devices Inc. in after-hours trading in New York and kept U.S. stock futures in the red on Wednesday, with contracts on the tech-heavy Nasdaq down about 0.3%.

Investors are also awaiting news from a central bank forum in Portugal, where the European Central Bank̵[ads1]7;s Christine Lagarde, the Federal Reserve’s Jerome Powell, the Bank of Japan’s Kazuo Ueda and the Bank of England’s Andrew Bailey are due to speak later in the day.

Treasury yields were broadly lower, but robust US economic data has underscored the likelihood that the Fed will need to move ahead with monetary policy tightening. Lagarde and several other decision-makers have also emphasized that the ECB will continue to raise interest rates.

“Will they stop or won’t they stop? Will we have a recession and when? All these questions going through investors’ minds are causing a lot of volume in thin markets,” said Luke Hickmore, chief investment officer at Abrdn.

Signs of economic stress in China are keeping markets attuned to the possibility of stimulus measures. Data on Wednesday showed industrial profits fell further last month, the latest in a string of weak data. The long-term market effect of more US curbs on technology sales to China was unclear.

Robert Lea, an analyst at Bloomberg Intelligence, said the restrictions could delay AI development by Chinese firms, without changing things significantly in the long run.

“Chinese AI firms may also be able to source dedicated AI chips from third-party countries,” Lea said. “So I think it will be difficult for the United States to enforce the regulations.”

The results of the Fed’s annual stress test of the banking industry will come later on Wednesday. Analysts largely expect the banks to sail through the tests even as regulators explore stricter requirements in the wake of a few collapses in the financial industry.

Important events this week:

  • US wholesale inventories, merchandise trade balance, Wednesday

  • The Fed will reveal the results of the annual stress test for the banking industry on Wednesday

  • Policy panel with ECB’s Christine Lagarde, Fed Chair Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey, Wednesday

  • Economic confidence in the eurozone, consumer confidence, Thursday

  • US GDP, first jobless claims, Thursday

  • Atlanta Fed President Rafael Bostic speaks Thursday

  • China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday

  • US Personal Income and Spending, University of Michigan Consumer Sentiment, Friday

Some of the main features of markets:

Stock

  • S&P 500 futures were down 0.2% at 3:26 a.m. New York time

  • Nasdaq 100 futures fell 0.3 percent

  • Futures on the Dow Jones Industrial Average were little changed

  • Stoxx Europe 600 rose 0.5%

  • The MSCI World index rose 0.2 percent

Currencies

  • The Bloomberg Dollar Spot index rose 0.2 percent

  • The euro was little changed at $1.0951

  • The British pound fell 0.1% to $1.2735

  • The Japanese yen was little changed at 144.05 per dollar

  • The offshore yuan fell 0.3% to 7.2444 per dollar

Cryptocurrencies

  • Bitcoin fell 1% to $30,346.25

  • Ether fell 1.6% to $1,863.13

Bonds

  • The yield on 10-year government bonds was little changed at 3.76%

  • Germany’s 10-year yield was little changed at 2.36%

  • UK 10-year yields were little changed at 4.38%

Raw materials

  • West Texas Intermediate crude rose 0.2% to $67.83 a barrel

  • Gold futures fell 0.2% to $1,919.50 an ounce

This story was produced with assistance from Bloomberg Automation.

—With assistance from Charlotte Yang, Ameya Karve and Allegra Catelli.

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