(Bloomberg) — A flurry of data spurring optimism that America will avoid a recession has put US stocks on course for their strongest week of the year.
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The latest readings, from inflation to jobless claims and retail sales, have reassured investors and supported hopes that the world’s biggest economy is heading for a “Goldilocks” scenario of contained price pressures accompanied by resilient growth. The S&P 500 has rallied 3.7% this week, while the tech-heavy Nasdaq 100 is up more than 5%, the biggest gains for both indexes since November.
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“There is little in the data flow now to really derail sentiment in the immediate near-term,” said Chris Weston, head of research at Pepperstone Group Ltd.
Stock markets around the world have largely erased last week’s losses, when traders were worried the Federal Reserve won’t cut interest rates fast enough to achieve a soft landing for the US economy. In Europe Friday, the Stoxx 600 Index added 0.4% as it headed for its best week since May. US equity futures ticked higher.
Friday’s gains were strongest in Asia, where stocks also headed for their best weekly performance in over a year, led by Japan as a weak yen boosts exporters’ earnings prospects. The currency is set for its sharpest weekly drop since May after sliding 1.3% against the dollar Thursday. It was around the 149 level, easing fears of a massive carry trade unwind.
“Asian equities are enjoying an impressive run today, driven by a renewed sense of ‘perfect balance’ thanks to recent well-anticipated economic releases,” said Hebe Chen, an analyst at IG Markets Ltd. “Japanese stocks, in particular, continue their robust recovery with no signs of slowing down yet.”
Treasuries were steady after Thursday’s dip, as evidence of US economic strength prompted traders to dial back bets for a jumbo September rate reduction. A 25 basis-point cut by the Fed remains fully priced, with more than 90 basis points of easing expected by the end of 2024.
Among individual stock moves Friday, Bayer AG shares rose more than 7% following a significant win for the German company in long-running cancer litigation over its Roundup weedkiller.
The latest gains on Wall Street saw the S&P 500 notch its strongest six-day winning run since November 2022. Strategists at Bank of America Corp. said US stocks just recorded a seventh straight week of inflows, underscoring the sustained appetite for equities among investors. BofA said about $5.5 billion went into US equity funds in the week through Aug. 14, in a note citing EPFR Global data.
US officials have been trying to use higher rates to ease inflation without causing the economy to contract. Fed Bank of St. Louis President Alberto Musalem said the time is nearing when it will be appropriate to cut rates. His Atlanta counterpart Raphael Bostic told the Financial Times he’s “open” to a reduction in September.
“A soft landing is no longer a hope. It’s becoming a reality,” said David Russell at TradeStation. “These numbers also suggest that recent market volatility wasn’t really a growth scare. It was just normal summer seasonality amplified by moves in the currency market.”
In commodities, gold was on track for a small weekly gain. Oil edged lower as the market weighed strong US economic data and a possible attack by Iran or its proxies on Israel against a lackluster Chinese demand outlook.
Key events this week:
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US housing starts, University of Michigan consumer sentiment, Friday
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Fed’s Austan Goolsbee speaks, Friday
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Canada housing starts, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.3% as of 9:36 a.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.2%
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Futures on the Dow Jones Industrial Average rose 0.1%
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The MSCI Asia Pacific Index rose 2.3%
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The MSCI Emerging Markets Index rose 1.6%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.1% to $1.0987
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The Japanese yen rose 0.4% to 148.68 per dollar
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The offshore yuan rose 0.1% to 7.1704 per dollar
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The British pound rose 0.3% to $1.2888
Cryptocurrencies
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Bitcoin rose 3% to $58,381.51
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Ether rose 2.5% to $2,613.65
Bonds
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The yield on 10-year Treasuries declined one basis point to 3.90%
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Germany’s 10-year yield declined one basis point to 2.25%
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Britain’s 10-year yield declined one basis point to 3.91%
Commodities
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Brent crude fell 0.6% to $80.56 a barrel
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Spot gold rose 0.2% to $2,462.12 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu, Richard Henderson, Robert Brand and Sagarika Jaisinghani.
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