Stocks up amid countdown to Powell, China stimulus: markets wrap

Stocks rose Thursday as China’s stimulus and better-than-expected data from Germany steadied some nerves in the anxious wait for a key speech by Federal Reserve Chair Jerome Powell. Treasury yields and dollar gauge dipped.

Energy stocks were among the biggest gainers in Europe, while US futures pushed higher in the wake of positive closes for the S&P 500 and Nasdaq 100. Hong Kong shares advanced after a delayed start to trading there due to a storm.

Sentiment was boosted after China stepped up stimulus with a further 1 trillion yuan ($146 billion) of measures and Germany’s economy proved more resilient than initially thought in the second quarter. Still, traders expect markets to remain volatile as they look to Powell’s comments due Friday at the Jackson Hole meeting for clues on the pace of US monetary tightening.

Crude oil added to a rally that could feed into renewed jitters about whether price pressures have peaked. Natural gas prices have surged to fresh highs, intensifying an energy crisis that threatens the euro-area economy and hence the global outlook.

Fed officials in the run-up to Jackson Hole have been clear they see more monetary tightening ahead, a message that’s eroded a bounce in stocks and bonds from mid-June troughs. The tension in markets is whether those assets will continue to head back toward the lows of the year.

“The market is really trying to justify a bear market rally and is looking for that dovish pivot from the Fed and it’s unlikely to get that,” Mehvish Ayub, senior investment strategist at State Street Global Advisors, said on Bloomberg Television. “We have to continue to expect this volatility, not just ahead of Jackson Hole, ahead of any sort of narrative from Fed officials.”

What to watch this week:

• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.7% as of 8:30 a.m. London time
• Futures on the S&P 500 rose 0.9%
• Futures on the Nasdaq 100 rose 1%
• Futures on the Dow Jones Industrial Average rose 0.7%
• The MSCI Asia Pacific Index fell 0.5%
• The MSCI Emerging Markets Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%
• The euro rose 0.5% to $1.0015
• The Japanese yen rose 0.5% to 136.46 per dollar
• The offshore yuan rose 0.4% to 6.8525 per dollar
• The British pound rose 0.5% to $1.1858

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.08%
• Germany’s 10-year yield declined two basis points to 1.35%
• Britain’s 10-year yield declined five basis points to 2.64%

Commodities

• Brent crude rose 0.6% to $101.79 a barrel
• Spot gold rose 0.7% to $1 763.35 an ounce