By Catherine Bosley and Allegra Catelli

European Equities Advance on Buoyant Chip Stocks: Markets Wrap · Bloomberg

(Bloomberg) -- European stocks advanced on Monday as investors snapped up buoyant chip sector stocks. The yield on 30-year US Treasuries rose to the highest since 2023.

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The Stoxx 600 rose 0.2%, helped by gains in semi-conductor heavyweights such as ASML Holding NV after Microsoft Corp.’s plan to spend $80 billion on data centers stoked interest. The mood mirrored trading in Asia, where tech advances in South Korea and Taiwan countered declines in China and Japan.

S&P 500 and Nasdaq 100 futures also advanced, pointing to a second session of gains after US stocks ended their longest losing streak since April on Friday. The dollar pulled back for a second day.

In Europe, investors’ focus will turn to inflation data for the euro-area and individual member nations due Monday and Tuesday. An expected acceleration in price increases is likely to remind policymakers that while their 2% goal might be in sight, it’s not yet within reach.

“European markets will take their cues from the US today and play a bit of catch-up,” said Joachim Klement, head of strategy, economic and ESG at Panmure Liberum. “In a week that is light on macro data, the inflation data will be key. Pressures are rising again, which could derail expectations of future rate cuts.”

The yen led losses among Group-of-10 currencies against the greenback, while the Canadian dollar got a lift from a Globe and Mail report that Prime Minister Justin Trudeau is likely to announce his resignation as leader of the Liberal Party this week. The gains in the loonie may be short-lived given the “bearish macro backdrop” for the currency, according to RBC Capital Markets.

China maintained its support for the yuan with the daily reference rate after the currency slumped past a key level on Friday. Services sector activity in the world’s No. 2 economy expanded at the fastest pace since May, a private survey showed on Monday, signaling improving domestic demand after Beijing’s stimulus blitz.

READ: Trump Haunts Central Banks Primed for Wary Rate Cuts in 2025

In the US, Federal Reserve Governor Lisa Cook will speak at a conference on law and microeconomics at the University of Michigan. Her colleague Tom Barkin, the Richmond Fed President, suggested on Friday his preference was to keep rates restrictive for longer.

The comments, and data showing the US economy remains strong, underscore the challenge investors face in deciphering the path ahead for US interest rates after Fed Chair Jerome Powell’s hawkish pivot in December.

Bond traders are entering the new year with diminished expectations as the resilient US economy and President-elect Trump’s tax-cut and tariff policies threaten to keep the fixed income market under pressure. Treasury yields rose for a second session on Monday, remaining near the highest levels since May.

In the US, President Joe Biden is set to order a ban on new offshore oil and gas development across some 625 million acres of US coastal territory, ruling out the sale of drilling rights in Atlantic and Pacific waters as well as the eastern Gulf of Mexico.

Oil steadied near its highest level in almost three months. Gold slipped, and Goldman Sachs Group Inc. said it no longer sees gold reaching $3,000 an ounce by the end of the year, pushing the forecast to mid-2026 on expectations the Federal Reserve will make fewer rate cuts.

Key events this week:

• Eurozone HCOB services and composite PMI, Monday

• US factory orders, S&P Global services and composite PMI, Monday

• Fed Governor Lisa Cook speaks, Monday

• Eurozone CPI, unemployment, Tuesday

• US job openings, trade, ISM services, Tuesday

• Richmond Fed President Thomas Barkin speaks, Tuesday

• Eurozone PPI, consumer confidence, Wednesday

• FOMC minutes, Wednesday

• Fed Governor Christopher Waller speaks, Wednesday

• ECB Governing Council member Francois Villeroy de Galhau speaks, Wednesday

• China CPI, PPI, Thursday

• Eurozone retail sales, Thursday

• BOE Deputy Governor Sarah Breeden speaks, Thursday

• Japan household spending, leading index, Friday

• US nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.2% as of 8:32 a.m. London time

• S&P 500 futures rose 0.2%

• Nasdaq 100 futures rose 0.3%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index was little changed

• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro rose 0.3% to $1.0339

• The Japanese yen fell 0.3% to 157.70 per dollar

• The offshore yuan was little changed at 7.3533 per dollar

• The British pound rose 0.4% to $1.2475

Cryptocurrencies

• Bitcoin rose 0.9% to $99,341.54

• Ether was little changed at $3,646.32

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.62%

• Germany’s 10-year yield advanced two basis points to 2.44%

• Britain’s 10-year yield advanced three basis points to 4.62%

Commodities

• Brent crude fell 0.4% to $76.23 a barrel

• Spot gold fell 0.4% to $2,629.86 an ounce

This story was produced with the assistance of Bloomberg Automation.

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