(Bloomberg) — Stocks extended their record-breaking rally and gold climbed to a new high as investors bet on an interest-rate cut by the Federal Reserve this week.
The MSCI All Country World Index climbed 0.1% in its 10th day of gains, set for the longest winning run in more than four years. Asian shares advanced 0.7% to a record and are poised for their best streak in nearly five years. Contracts for the S&P 500 edged up 0.1% after the gauge closed at its highest ever. Futures for European stocks also edged up.
Gold rose to a new record while a gauge of the dollar edged lower for a second day. Treasuries steadied as investors awaited Tuesday’s US retail sales data. The yen gained against the dollar, in part due to the entry of Japan’s Agriculture Minister Shinjiro Koizumi into the leadership race of the ruling Liberal Democratic Party.
Recent data showing softer labor-market conditions and no major surprises in inflation prints have reinforced expectations for a quarter-point rate cut by the Fed on Wednesday. Traders see the move as virtually certain, though the debate is now shifting to how quickly the central bank might ease policy beyond that, with inflation still running above the Fed’s 2% target.
The central bank is trying to be accommodative by “doing what the administration wants it to do, without hurting the credibility of the Fed,” said Gordon Tsui, managing director and head of fixed income at Ping An of China Asset Management (HK), on Bloomberg TV. “I think this is the ultimate goal of the Fed officials.”
In other Fed news, a US appeals court blocked the president from removing Governor Lisa Cook from her post while her lawsuit challenging the dismissal proceeds. Also, Trump’s economic adviser Stephen Miran is on his way to joining the central bank’s board after the Senate confirmed him to the post.
A quarter-point reduction is seen as a sure thing when the Fed announces its policy decision Wednesday, with a small potential for a half-point move amid signs US job growth is slowing rapidly.
Financial markets broadly are leaning toward concerns around the employment picture taking precedence and the Fed conveying a dovish tone.
US policymakers will also release their quarterly update of economic and rate forecasts — known as the dot plot. In June, Fed officials were narrowly in favor of two quarter-point cuts in 2025.
What strategists say:
Treasury curve steepening will get an extra kick even though bond traders were expecting Stephen Miran to be in place for this week’s Fed meeting. Traders will now face the risk of Miran putting in a very low dot plot forecast, which is not fully priced in.
—Mark Cranfield, Markets Live strategist. For full analysis, click here.
“In the session ahead, we navigate US retail sales and that poses a degree of risk to markets,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “However, with the Fed meeting looming large in the following session, it will likely take an outsized surprise in retail sales to really move the dial on risk.”
Meanwhile, President Donald Trump said he would speak with Chinese leader Xi Jinping on Friday as US and Chinese officials reached a framework deal on keeping the TikTok app running in the US. Oracle Corp. is among a consortium of firms that would enable TikTok to continue operations in the US if a framework deal is finalized, CBS News reported.
In European news, Trump expects to announce economic deals totaling more than $10 billion during his trip this week to the United Kingdom.
France’s central bank trimmed its economic outlook for the next two years, warning of downside risks from budget uncertainty following another government collapse.
In Japan, Koizumi said he will run in the ruling party leadership race as the LDP looks for a successor capable of turning around its prospects and leading the nation. The move reduces the split of the LDP’s centrist vote and raises his chances, according to Credit Agricole CIB’s David Forrester.
Corporate News:
President Trump is bringing a $15 billion defamation and libel lawsuit against The New York Times, according to a post on Truth Social. BNP Paribas SA has raised key return and capital targets as it prepares a new strategic plan. Hesai Group, the world’s largest maker of lidar sensors used in cars, rose in its Hong Kong trading debut after its HK$4.2 billion ($535 million) listing in the city. Tencent Holdings Ltd. is considering raising about 8 billion yuan ($1.1 billion) in its first bond sale in four years, according to people familiar with the matter. Alphabet Inc. on Monday joined an elite group of companies valued at more than $3 trillion, the latest sign of improving investor sentiment toward the Google parent. Google said it will invest £5 billion ($6.8 billion) over two years in the UK to help build an artificial intelligence economy in the country. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 6:53 a.m. London time Nasdaq 100 futures rose 0.2% The MSCI Asia Pacific Index rose 0.7% Japan’s Topix rose 0.4% Australia’s S&P/ASX 200 rose 0.3% Hong Kong’s Hang Seng was little changed The Shanghai Composite was little changed Euro Stoxx 50 futures were little changed Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1777 The Japanese yen rose 0.3% to 147.02 per dollar The offshore yuan was little changed at 7.1140 per dollar The British pound rose 0.1% to $1.3618 Cryptocurrencies
Bitcoin rose 0.4% to $115,889.37 Ether rose 0.4% to $4,529.68 Bonds
The yield on 10-year Treasuries was little changed at 4.04% Japan’s 10-year yield advanced one basis point to 1.600% Australia’s 10-year yield declined six basis points to 4.22% Commodities
Spot gold was little changed West Texas Intermediate crude rose 0.2% to $63.41 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joanne Wong and Winnie Hsu.
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