(Bloomberg) — European stocks were set for a steady start after Asian shares rallied after economic data supported the case for Federal Reserve interest-rate cuts. The yen bounced off its lowest level against the dollar since 1986.
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Euro Stoxx 50 futures were flat, tracking a similar move in contracts for US equities after the S&P 500 and Nadaq 100 index climbed to a record high in a holiday-shortened session Wednesday. The pound was steady ahead of the UK general election where the Labour Party is expected to win by a landslide.
The MSCI Asia-Pacific gauge hit its highest point in over two years, with technology shares contributing the most to the rally. Japan’s Topix climbed to a record intraday high and equities in South Korea, Taiwan, and Australia also advanced.
The yen strengthened after once again touching its lowest level since 1986 against the greenback in the previous session. Speculation persists that the Bank of Japan will tighten policy only gradually. A gauge of dollar weakened for the third successive session.
“Weaker Treasury yields and a dip in the US dollar on dovish rate bets may be supportive of risk sentiments across the region,” said Jun Rong Yeap, market strategist at IG Asia Pte. The “slowing US growth prospects” are making a September rate cut “more likely than not,” he said.
Global stocks are on track for their longest stretch of weekly gains since March, driven by a series of soft economic data in the US, which has revived the possibility of rate cuts in September. On Wednesday, reports showed the American services sector contracted at the fastest pace in four years, and the labor market saw further signs of softening.
Treasury 10-year yields dropped seven basis points to 4.36% in the prior session, which weighed on an index of dollar strength. Most Asian currencies gained against the greenback led by Thailand’s baht and Korean won.
Minutes from the Fed’s June policy meeting showed officials were awaiting evidence that inflation is cooling and were divided on how long to keep rates elevated. Swap…
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