European Stocks Gain as Tech Rallies; Yen Slumps: Markets Wrap

(Bloomberg) — European stocks gained along with US equity futures following blockbuster earnings from Microsoft Corp. and Alphabet Inc. The yen weakened to a 34-year low after the Bank of Japan kept its key interest rate unchanged.

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The Stoxx Europe 600 climbed 0.5%, heading for its first weekly advance in four, with the technology sector among the leading gainers. Miners rose as copper hit $10,000 a ton for the first time in two years, though Anglo American Plc underperformed after rejecting BHP Group’s $39 billion takeover proposal.

Thyssenkrupp AG jumped more than 10% after Czech billionaire Daniel Kretinsky’s EP Corporate Group agreed to take a 20% stake in the German company’s troubled steel unit. Amundi SA rose after reporting net inflows for the first quarter that beat the average analyst estimate. NatWest Group Plc advanced after an earnings beat.

Contracts for the S&P 500 and Nasdaq 100 signaled the underlying gauges are set to rebound from Thursday’s losses. That’s after Alphabet crushed sales estimates and announced a dividend. Fellow megacap Microsoft also beat forecasts, lifted by corporate demand for the software maker’s cloud and artificial-intelligence offerings.

About 79% of S&P 500 firms that have reported so far have beaten analysts’ earnings estimates, according to JPMorgan Chase & Co. strategists. Still, stock price reactions have been underwhelming, with better-than-expected results seeing below average upside, while those missing estimates are being penalized by more than usual, the strategists wrote.

While earnings continue to roll in, the focus Friday will also be on US data, with the Federal Reserve’s preferred measure of inflation of particular interest. Treasury yields dipped following yesterday’s losses when economic data pushed back expectations for policy easing. A gauge of the dollar was steady.

The strong earnings news from the US supported gains on Friday for some of Asia’s tech titans, including Samsung Electronics Co., Taiwan Semiconductor Manufacturing Co. and Tencent Holdings Ltd. Equity benchmarks in Japan, South Korea, Taiwan and China all advanced.

In Japan, the yen reversed initial gains to fall to 156 per dollar, the lowest level since 1990, following the BOJ decision. The central bank Friday kept the range for its benchmark rate between 0% and 0.1%, according to a statement, as widely expected by economists.

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“The BOJ definitely sees an upside risk on inflation,” Peiqian Liu, Asia economist for Fidelity International, said on Bloomberg Television. The yen’s slide reflects disappointment among investors who were expecting a more hawkish tone from the central bank, she said.

US core PCE price index data published Thursday advanced at a faster-than-expected 3.7% clip. The print combined with a US gross domestic product data that trailed all forecasts to rekindle the specter of stagflation. The Fed’s preferred inflation measure, the core PCE deflator, is due later Friday.

Elsewhere, gold edged higher Friday even as the precious metal headed for a weekly loss. West Texas Intermediate rose to the highest level in more than a week, on pace for a weekly advance.

Key events this week:

• 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

• The Stoxx Europe 600 rose 0.5% as of 8:29 a.m. London time

• S&P 500 futures rose 0.8%

• Nasdaq 100 futures rose 1%

• Futures on the Dow Jones Industrial Average rose 0.1%

• The MSCI Asia Pacific Index rose 0.5%

• The MSCI Emerging Markets Index rose 1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was unchanged at $1.0730

• The Japanese yen fell 0.7% to 156.81 per dollar

• The offshore yuan was little changed at 7.2597 per dollar

• The British pound fell 0.1% to $1.2501

Cryptocurrencies

• Bitcoin fell 0.5% to $64,483.21

• Ether fell 1% to $3,141.83

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.68%

• Germany’s 10-year yield declined two basis points to 2.61%

• Britain’s 10-year yield declined three basis points to 4.33%

Commodities

• Brent crude rose 0.7% to $89.62 a barrel

• Spot gold rose 0.5% to $2,343.91 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rita Nazareth.

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