Stocks Rise as Swiss Move Fuels Rate-Cut Momentum: Markets Wrap

(Bloomberg) — European stocks rose after the Swiss National Bank delivered an interest rate cut in a busy day for monetary policy in the region.

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The Stoxx 600 index rose 0.4% Thursday, with the technology, insurance and real estate sectors leading gains. US futures contracts also strengthened, signaling fresh record highs when Wall Street reopens after a public holiday. The dollar edged higher against a basket of currencies, while US 10-year Treasury yields rose three basis points.

The Swiss franc slid as much as 0.5% versus the euro, and tumbled 0.8% against the dollar after policymakers cut borrowing costs for a second time, saying inflation pressure has decreased again compared to the previous quarter. Switzerland’s stock market rose 0.6%.

The rate cut “implies they feel confident that the inflation dynamic is manageable, and that bodes reasonably well for other central banks,” said Guy Miller, chief market strategist at Zurich Insurance Company Ltd. “It confirms that rate cuts are very much in play for the remainder of this year and that should support risk assets.”

Norges Bank kept rates on hold and the Bank of England is expected to do the same when policy makers announce their decision later Thursday. The BOE is widely expected to kick off its easing cycle in August, a view reinforced by data on Wednesday that showed UK inflation has slowed to the central bank’s 2% target.

Investors are also keeping a close eye on developments in France, which is testing investor appetite for its bonds with an auction of as much as €10.5 billion ($11.3 billion) in government debt. The sale is the first since President Emmanuel Macron shocked markets by calling a snap election, sending French yield premia over Germany to the highest since 2017.

French yields edged higher along with euro-area peers, but stayed off recent multi-month highs.

Wall Street, meanwhile, appeared headed for fresh records. The S&P 500 hit its 31st record high of the year on Tuesday, powered by the ongoing AI frenzy and resilient economic growth that should continue to support corporate earnings, especially in the technology sector.

Contracts on the Nasdaq 100 rose 0.6% and those on the S&P 500 added 0.4% while Nvidia Corp. — now the world’s most valuable company — rose 3.7% in New York premarket trading. Tech sector peers including Super Micro Computers and Micron Technology Inc. also advanced.

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Among European stock movers, German drug developer Evotec SE rallied 16% following a report it’s speaking to advisers after a decline in its share price raised concerns about its vulnerability to a takeover. Societe BIC SA slumped as much as 19%, the most on record, after the French maker of pens and lighters downgraded its sales guidance.

Earlier in the day, the offshore yuan slipped to its weakest level this year on signs that policymakers are loosening their grip on the currency. The People’s Bank of China set the yuan’s daily reference rate at its lowest since November. China’s 10-year government bond futures rose to a record high after the PBOC hinted at interest-rate reform and signaled it could trade government bonds in the secondary market — a key tool to regulate liquidity.

Key events this week:

• Eurozone consumer confidence, Thursday

• UK BOE rate decision, Thursday

• US housing starts, initial jobless claims, Thursday

• Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday

• US existing home sales, Conf. Board leading index, Friday

• Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 9:33 a.m. London time

• S&P 500 futures rose 0.3%

• Nasdaq 100 futures rose 0.6%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index fell 0.2%

• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.3% to $1.0716

• The Japanese yen fell 0.2% to 158.41 per dollar

• The offshore yuan was little changed at 7.2872 per dollar

• The British pound fell 0.2% to $1.2698

Cryptocurrencies

• Bitcoin rose 1.3% to $65,710.82

• Ether rose 1.3% to $3,597.53

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.25%

• Germany’s 10-year yield advanced two basis points to 2.43%

• Britain’s 10-year yield advanced two basis points to 4.09%

Commodities

• Brent crude rose 0.3% to $85.33 a barrel

• Spot gold rose 0.2% to $2,333.68 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chiranjivi Chakraborty and Winnie Hsu.

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