Europe Stock Futures Gain on Earnings, Gold Drops: Markets Wrap

(Bloomberg) — European equity futures climbed, tracking gains in Asian markets on optimism that big technology companies will deliver robust earnings this week.

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The Euro Stoxx 50 contract advanced 0.5% amid strong results from Novartis AG and Renault SA, while US stock futures were little changed.

In Asia, technology firms drove Hong Kong gauges higher after UBS Group AG upgraded Chinese stocks to overweight, citing resilient earnings despite the nation’s property and macro worries. Japanese shares held their advance even as the yen briefly strengthened against the dollar after Finance Minister Shunichi Suzuki’s warnings against excessive currency moves.

Earnings are front and center of investor’s minds this week when about 180 companies — representing over 40% of the S&P 500 market value — are due to report their results. The focus on corporate results comes after a rout fueled by geopolitical fears and signals the Federal Reserve will be in no rush to lower rates.

“From an earnings perspective, Asia is expected to see strong growth” compared with other markets, said Dong Chen, chief Asia strategist at Banque Pictet. Chen said he expects companies in India, South Korea, Taiwan and China to lead the region’s earnings growth.

Treasuries were steady in Asia before a flurry of bond auctions that will test investors’ appetite after yields hit the highest in 2024. Australian and New Zealand bonds advanced.

The dollar was little changed versus major peers, with the pause in its recent surge providing relief to Asian markets. A broader gauge of emerging market currencies gained in four out of five sessions after hitting a 2024 low last week.

Elsewhere, the Bank of Japan is widely expected to leave its benchmark interest rate unchanged Friday, with investors focusing on any hints of a less dovish tilt as the yen trades around a 34-year low.

Gold extended losses after its biggest daily decline in almost two years, with easing tension in the Middle East and signs the Federal Reserve will keep rates higher for longer crimping demand. Oil nudged higher as traders weighed the next steps between Israel and Iran amid signs of easing hostilities following a tit-for-tat exchange of attacks last week.

Corporate highlights:

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• Novartis boosted its full-year revenue and operating income guidance as sales of its blockbuster medicines for heart disease and psoriasis outpaced expectations.

• Renault’s first-quarter sales beat estimates on demand for models such as the revamped Clio, Sandero and electric Megane E-Tech.

• Chinese bubble-tea maker Sichuan Baicha Baidao Industrial Co. plunged more than 31% in its trading debut in Hong Kong, underscoring the challenges the financial hub is facing in reviving investor confidence. Tianjin Construction shares slumped 30% in Hong Kong debut.

Nearly two-thirds of 409 respondents in Bloomberg’s Markets Live Pulse survey said they expect earnings to give the US equity benchmark a boost. That’s the highest vote of confidence for profits since the poll began asking the question in October 2022.

The challenge to S&P 500 returns this earnings season is that companies will have to produce earnings — and outlooks — that support the already elevated multiples, according to Megan Horneman at Verdence Capital Advisors.

Indeed, stakes are high for the “Magnificent Seven” megacaps, whose profits are forecast to rise nearly 40% from a year ago, according to Bloomberg Intelligence.

Microsoft Corp., Alphabet Inc., Meta Platforms Inc. and Tesla Inc. report results this week — kicking off earnings for the so-called Magnificent Seven. With AI seen as the key to future profits, its contributions to the earnings mix is a focus for traders, a BofA team including Ohsung Kwon and Savita Subramanian said.

Key events this week:

• Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Tuesday

• US new home sales, Tuesday

• Tesla, PepsiCo earnings, Tuesday

• BOE chief economist Huw Pill speaks, Tuesday

• Germany IFO business climate, Wednesday

• US durable goods, Wednesday

• IBM, Boeing, Meta Platforms earnings, Wednesday

• US GDP, wholesale inventories, initial jobless claims, Thursday

• Microsoft, Alphabet, Airbus earnings, Thursday

• Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday

• US personal income and spending, PCE deflator, University of Michigan consumer sentiment, Friday

• Exxon Mobil, Chevron earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 2:26 p.m. Tokyo time

• Nasdaq 100 futures down 0.1%

• Japan’s Topix was little changed

• Australia’s S&P/ASX 200 rose 0.4%

• Hong Kong’s Hang Seng rose 1.7%

• The Shanghai Composite fell 0.5%

• Euro Stoxx 50 futures rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0654

• The Japanese yen was little changed at 154.76 per dollar

• The offshore yuan was little changed at 7.2574 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $66,358.91

• Ether fell 0.4% to $3,180.06

Bonds

Commodities

• West Texas Intermediate crude rose 0.6% to $82.40 a barrel

• Spot gold fell 0.6% to $2,312.25 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott.

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