European Stocks Buoyed by UBS; Treasuries Advance: Markets Wrap

(Bloomberg) -- European shares climbed, bolstered by record profits at Switzerland’s UBS Group AG and expectations central banks’ rate-tightening cycle may be nearing an end.

Most Read from Bloomberg

US Health Officials Urge Moving Pot to Lower-Risk Category

UBS Turns to Cost Cuts After $29 Billion Credit Suisse Windfall

Hong Kong to Shut Down City Before Super Typhoon Saola Hits

Singapore S$1 Billion Laundering Scandal Embroils Its Banking Giants

Stocks Up Again in ‘Bad News Is Good News’ World: Markets Wrap

UBS Group’s more than 7% surge helped the Stoxx 600 benchmark trim its monthly retreat. The lender posted the biggest-ever quarterly profit for a bank as a result of its emergency takeover of Credit Suisse Group AG. Futures for the S&P 500 were little changed, while contracts on the Nasdaq retreated after the underlying index notched up four straight days of gains.

Markets are closing out the month with price-growth data and China’s weakening economy center stage.

European stocks pared their advance after inflation for the region stopped slowing in August, presenting European Central Bank officials with a quandary as they weigh the possibility of tighter policy against signs of flagging growth. The 10-year US Treasury yield, meanwhile, was near a three-week low after weaker-than-expected economic numbers on Wednesday supported predictions for the Fed to ease back on interest-rate hikes.

“The big market catalyst we’re looking for in September is the Fed meeting,” Hugh Gimber, global market strategist at JPMorgan Asset Management, said by phone. “Tomorrow’s payrolls data will be hugely relevant for that meeting. Without a slowdown in wages, a soft landing is impossible.”

US jobless numbers picked up slightly to 235,000 according to economists polled by Bloomberg ahead of initial claims data due Thursday. Friday’s non-farm payrolls are seen at 170,000 in August versus 187,000 in July, while hourly wage growth is predicted to slow slightly.

Equity benchmarks for mainland China and Hong Kong fell after manufacturing activity in China contracted again, albeit less than feared, while the services PMI showed slowing expansion. The offshore yuan and Australian dollar pared earlier gains against the greenback.

The latest signs of weakness in China were accompanied by further signs of official support. The People’s Bank of China met with lenders and private businesses to discuss improving their access to funding. Two of China’s biggest cities lowered mortgage requirements for some homebuyers following central government guidance, fanning expectations that more will follow suit to arrest a record housing slowdown.

“The problems China have now are deep-seated, structural ones,” said Rob Subbaraman, chief economist and head of global markets research for Nomura Singapore Limited, on Bloomberg Television. “It’s not clear to us that these piecemeal policy measures are really enough to revive the economy. We remain cautious.”

The S&P 500 is headed for the worst month since February, while the Nasdaq 100 is set for the largest decline this year. Asian and global stocks are also on pace for the biggest monthly losses since February.

Elsewhere, Brent crude oil advanced for a third day and gold climbed after a string of gains this week. Bitcoin was little changed above $27,000.

Key events this week:

Eurozone CPI, unemployment, Thursday

ECB publishes account of July monetary policy meeting, Thursday

US personal spending and income, initial jobless claims, Thursday

China Caixin manufacturing PMI, Friday

Eurozone S&P Global Eurozone Manufacturing PMI, Friday

South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday

Boston Fed President Susan Collins speaks at virtual event, Friday

US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.1% as of 10:37 a.m. London time

S&P 500 futures were little changed

Nasdaq 100 futures fell 0.2%

Futures on the Dow Jones Industrial Average rose 0.3%

The MSCI Asia Pacific Index was little changed

The MSCI Emerging Markets Index fell 0.5%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%

The euro fell 0.5% to $1.0872

The Japanese yen rose 0.3% to 145.86 per dollar

The offshore yuan was little changed at 7.2980 per dollar

The British pound fell 0.3% to $1.2679

Cryptocurrencies

Bitcoin fell 0.2% to $27,205.6

Ether was little changed at $1,704.67

Bonds

The yield on 10-year Treasuries declined two basis points to 4.09%

Germany’s 10-year yield declined five basis points to 2.49%

Britain’s 10-year yield declined four basis points to 4.38%

Commodities

Brent crude rose 0.4% to $86.19 a barrel

Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Richard Henderson.

Blog

European Stocks Buoyed by UBS; Treasuries Advance: Markets Wrap