(Bloomberg) — US stocks were set to extend gains on Thursday after a dovish Federal Reserve and Meta Platforms Inc.’s sales beat added fuel to a rebound for technology companies. The Bank of England cut rates from a 16-year high.
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Gauges for Nasdaq 100 and S&P 500 futures contracts both rose 0.4% after the main indexes recorded their biggest gains since February in the previous session. Meta’s beat contributed to the buoyant mood, offering evidence that spending on artificial intelligence can translate into better returns for investors. The stock gained more than 6% in premarket trading.
Jobless claims data due later on Thursday and July’s unemployment print will provide further clues on the state of the US labor market. The Fed signaled on Wednesday that officials are on course to ease monetary policy next month unless inflation progress stalls.
“We’ll see tomorrow with payrolls if the Fed is right, but if it is, then the upward trend on equity markets is likely to continue,”said Amelie Derambure, a multi-asset portfolio manager at Amundi in Paris.
The Bank of England lowered rates by 25 basis points in a narrow vote, as expected, while signaling further cautious reductions ahead. The pound extended declines to 0.8% while yields on 10-year gilts lowered six basis points.
For equities, the bullish mood in the US didn’t extend to Europe, where the regional benchmark dropped on a series of disappointing results from automakers and Societe Generale SA.
The Stoxx 600 index weakened 0.2% after BMW AG’s earnings slowed and German rival Volkswagen AG’s margins declined, with both automakers suffering from weak demand in China. A poor performance in Societe Generale SA’s retail unit sent the stock plummeting 7.7%, dragging down European peers such as HSBC Holdings Plc and UniCredit SpA.
The disappointing results serve as further evidence of building pressure for European companies on the back of softer demand and a macro backdrop that remains beset by challenges. The European benchmark has been trading sideways for the past two months after rallying in the year through May.
“People are a bit more concerned that we will see a sharper slowdown than what’s currently priced in,” said Richard Flax, chief investment officer at digital wealth manager Moneyfarm. “We’ve seen downgrades to next quarter’s earnings. There’s also been some notable commentary from macro bellwethers about consumer spending. And that does give you pause.”
For technology stocks, investors will be watching earnings from Amazon.com Inc. after the close for further clues about returns from investments in AI. A report from Apple Inc. will probably give indicators of how the iPhone 16 is expected to perform in September.
The dollar rose 0.2% against a basket of currencies after recording its worst day since May on Wednesday. The yen erased earlier gains to trade little changed. Treasuries yields advanced two basis points to 4.05%.
In commodities, oil extended gains after Iran reportedly ordered a retaliatory strike on Israel for killing a Hamas leader on its soil.
Corporate Highlights:
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Arm Holdings shares fell as much as 13% in premarket trading on Thursday after the chip designer stuck to its annual forecast, despite topping earnings estimates in the fiscal first quarter.
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Societe Generale SA posted surging trading revenue even as its domestic retail unit continues to disappoint.
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Shell Plc reported second-quarter earnings that beat estimates and confirmed another $3.5 billion of share buybacks.
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Rolls-Royce Holdings Plc raised its profit guidance for the year and said it will reinstate dividend payments. Its shares rose as much as 11%
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Barclays Plc said it will repurchase as much as £750 million of shares as Chief Executive Officer C.S. Venkatakrishnan makes good on his promise to improve the bank’s payouts to investors.
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Anheuser-Busch InBev NV sold less beer than expected in the second quarter, hurt by a downturn in demand in China and slow claw back of sales in the US following the boycott of Bud Light.
Key events this week:
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US initial jobless claims, ISM Manufacturing, Thursday
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Amazon, Apple earnings, Thursday
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Bank of England rate decision, Thursday
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US employment, factory orders, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.4% as of 7:07 a.m. New York time
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Nasdaq 100 futures rose 0.4%
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Futures on the Dow Jones Industrial Average rose 0.1%
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The Stoxx Europe 600 fell 0.2%
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The MSCI World Index fell 0.3%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $1.0790
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The British pound fell 0.8% to $1.2758
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The Japanese yen was little changed at 150.12 per dollar
Cryptocurrencies
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Bitcoin was little changed at $64,569.96
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Ether fell 1% to $3,188.4
Bonds
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The yield on 10-year Treasuries advanced two basis points to 4.05%
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Germany’s 10-year yield declined two basis points to 2.28%
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Britain’s 10-year yield declined six basis points to 3.91%
Commodities
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West Texas Intermediate crude rose 0.9% to $78.64 a barrel
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Spot gold fell 0.5% to $2,435.68 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sagarika Jaisinghani.
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