(Bloomberg) -- Equities extend a rebound that saw US stocks roar back from losses sparked by a hot inflation reading. The dollar and Treasury yields retreated from recent highs.
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Europe’s Stoxx equity gauge rose about 1%, led by real estate and utilities, while Hong Kong-listed technology companies earlier surged as much as 5%. Futures for the S&P 500 and Nasdaq 100 indexes steadied after Wall Street closed 2.6% higher on Thursday, ending a six-day losing streak.
The gains -- after consumer price data that came in above forecasts and cemented another 75 basis-point rate hike by the Federal Reserve -- marked the S&P 500’s best reaction to a CPI release since July 2009, according to Bloomberg Intelligence. Some investors saw it as a result of excessively short market positioning, which traders rushed to cover once the data was out of the way.
Mow the wait is on for the third-quarter earnings, with big Wall Street banks including JPMorgan Chase & Co and Citigroup Inc, reporting later on Friday. Banks are expected to post the biggest profit decline of any S&P 500 Index sector, according to data compiled by Bloomberg Intelligence.
“Even though investors may look through a disappointing CPI print, it will be a much higher bar to look through weak corporate earnings.” Invesco global market strategist David Chao told clients. “Growth is below trend and decelerating because the Fed is still tightening. This is a tough backdrop for risk assets.”
Investors will focus on what’s brewing for the banks as Fed tightening slows economic growth and potentially forces increased bad debt provisioning.
On currencies, the dollar held below two-week highs hit earlier this week against major currencies while Treasury yields slipped after the previous day’s big gains, with two-year rates shedding more than four basis points.
The pound slipped after a sharp rally on Thursday, following a report that the government may reverse some of its controversial tax-cutting plans. Friday is the last day of the Bank of England’s emergency bond-buying program.
Cryptocurrencies also got a boost, lifting Bitcoin to a one-week high and putting the largest token on the cusp of retaking the $20,000 level.
Later in the day, investors will listen for more commentary from Fed officials, with Esther George, Lisa Cook and Christopher Waller scheduled to speak.
Elsewhere, both oil and gold headed for weekly losses as signs of a global economic slowdown and tighter monetary policy threaten to sap energy consumption. The International Energy Agency earlier warned production cuts agreed by OPEC+ risked causing oil prices to spike and tipping the global economy into recession.
Key events this week:
Earnings on Friday: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
US retail sales, business inventories, University of Michigan consumer sentiment, Friday
BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.9% as of 8:39 a.m. London time
Futures on the S&P 500 were little changed
Futures on the Nasdaq 100 were little changed
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 2%
The MSCI Emerging Markets Index rose 1.5%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.2% to $0.9761
The Japanese yen fell 0.3% to 147.53 per dollar
The offshore yuan fell 0.1% to 7.1873 per dollar
The British pound fell 0.5% to $1.1265
Cryptocurrencies
Bitcoin rose 1.2% to $19,614.23
Ether rose 1.9% to $1,318.84
Bonds
The yield on 10-year Treasuries declined three basis points to 3.92%
Germany’s 10-year yield declined eight basis points to 2.20%
Britain’s 10-year yield declined 11 basis points to 4.09%
Commodities
Brent crude rose 0.1% to $94.67 a barrel
Spot gold was little changed
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