Europe stocks boosted by cyclicals; bonds advance: markets wrap

European stocks rose for a tenth straight session on Friday, with French equities nearing a record as economic reopenings boosted cyclical and luxury firms.

France’s CAC 40 was poised to hit the highest in more than two decades as retailers led gains in European stocks. Tech was the biggest sectoral decliner amid falls for chip stocks. Most Asian shares slipped as the spread of the delta Covid-19 variant and China’s regulatory curbs restrained sentiment. US equity futures were steady after the S&P 500 hit a fresh peak.

While Asian stocks continue to struggle as vaccinations lag and the delta variant hampers reopenings, Europe and the US have pushed ahead with inoculations and equities there are hitting records. The global backdrop is sufficient for some strategists to predict a rebound in the reflation trade tied to economic revival. US Treasury 10-year yields, for instance, are set for the first back-to-back weekly climb since March.

“It’s really hard to keep people back, or put people back, in lockdown,” Ann Miletti, head of active equity at Wells Fargo Asset Management, said in an interview on Bloomberg Television. She flagged “pent-up demand” but also warned of the risk of an equity correction after a prolonged period of calm.

Treasury yields retraced Thursday’s jump, as the latest US data showed prices paid to producers rose in July by more than economists forecast, suggesting that higher commodity costs and supply bottlenecks are still adding to inflationary pressures for companies. Initial unemployment claims fell for a third week and home prices rose by a record.

“While inflation has been the overarching theme this week, US jobless data from yesterday highlighted the improving employment backdrop as well,” said Jim Reid, a strategist at Deutsche Bank AG in London. “Yesterday’s US producer prices surprised to the upside, highlighting the ongoing inflationary pressures from ever-rising commodity costs and supply chain bottlenecks.”

Elsewhere, oil dipped as traders grappled with the impact of the delta variant on demand. In agricultural commodities, a prospective squeeze on global grain supplies is reigniting a rally in crop prices. Bitcoin traded around $46 000.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 8:31 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 fell 0.4%
• The MSCI Emerging Markets Index fell 0.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1734
• The Japanese yen rose 0.1% to 110.27 per dollar
• The offshore yuan was little changed at 6.4832 per dollar
• The British pound was little changed at $1.3804

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.34%
• Germany’s 10-year yield was little changed at -0.47%
• Britain’s 10-year yield declined one basis point to 0.59%

Commodities

• Brent crude fell 0.6% to $70.90 a barrel
• Spot gold rose 0.3% to $1 758.32 an ounce