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(Bloomberg) -- Shares in Europe look primed to open higher after a holiday break, following gains in Asia and on Wall Street as investors bet that the Federal Reserve will cut interest rates as early as March. (Bloomberg) -- Shares in Europe look primed to open higher after a holiday break, following gains in Asia and on Wall Street as investors bet that the Federal Reserve will cut interest rates as early as March. The Euro Stoxx futures rose 0.6%. The advance came after the MSCI Asia Pacific Index jumped as much as 1.1%, set for the highest close in over four months. Hong Kong stocks led the rally, with Chinese tech firms rebounding after Beijing softened its stance on the gaming industry following a stock selloff sparked by proposed curbs. US futures were virtually flat after the S&P 500 closed Tuesday within 0.5% of its record high, achieved early last year when interest rates remained at pandemic lows. Meanwhile, 10-year Treasury yields fell 2 basis points in Asia trading after Tuesday’s auctions drew buyers as the market prices in an aggressive path of Fed easing in 2024. The dollar is steady against most major currencies. “Asia’s recent trend will continue, with US markets rallying for the remainder of the week,” said Redmond Wong, a strategist at Saxo Capital Markets in Hong Kong. “China and Hong Kong, however, are likely to continue to lag and the rally in Hong Kong may be short-lived.” Australia’s S&P/ASX 200 index rose to its highest since April 2022, fueled by gains in miners amid rising iron ore prices, as markets reopen after a long weekend. Mainland China equities rebounded from earlier losses, after data showed a quickening speed of growth in the country’s industrial profits, helped by favorable base effects. Japan’s Nikkei 225 index gained over 1%, hovering slightly below its previous high in July, after Bank of Japan board members discussed the potential timing of ending the negative rate policy during their meeting last week, with several members indicating they see no rush to make the move. The yen weakened and Japanese government bond yields fell after the release of the summary. “Bullish views prevail among investors towards year end as there are no particular blind spots in Japanese equities,” said Masanari Takada, a derivatives strategist at JPMorgan Securities Japan Co. “While an earlier-than-expected BOJ policy change and yen appreciation may be a risk to top-down traders, the results from BOJ summary today provided a sense of relief.” In Hong Kong, major tech stocks partially recovered from Friday’s $80 billion rout, after authorities signaled a willingness to dial back controversial new gaming restrictions. Tencent climbed as much as 6.2% while smaller rival NetEase jumped more than 14%. US stocks have risen 4.5% this month so far, with the gain since the start of the year now 24%. While the US and Australian indexes near record highs and Indian gauges hover near all-time peaks from earlier this month, MSCI’s all-country index is 4.5% off its November 2021 record. Asia is a laggard region, with the MSCI Asia-Pacific Index still 25% off its February 2021 high. Elsewhere, oil reversed gains after rising on tensions in the Middle East, with a fresh attack on shipping in the Red Sea prompting vessels to avoid the key shipping route. Gold slipped, and Bitcoin rose slightly after a retreat as traders assessed how crypto markets might react if regulators meet expectations by approving the first US exchange-traded funds investing directly in the token. Also in the corporate world, SoftBank Group saw the biggest intraday gain since June 13, after announcing it will receive $7.6 billion of T-Mobile US shares without additional costs. Key events this week: Japan industrial production, retail sales, Thursday US wholesale inventories, initial jobless claims, Thursday UK Nationwide house prices, Friday David Sowerby, managing director and portfolio manager at Ancora, explains why he expects a less than a 6% return on the S&P 500 in 2024.Source: Bloomberg Some of the main moves in markets: Stocks S&P 500 futures were little changed as of 6:47 a.m. London time Nasdaq 100 futures were little changed Japan’s Topix rose 1.1% Hong Kong’s Hang Seng rose 1.8% The Shanghai Composite rose 0.5% Euro Stoxx 50 futures rose 0.6% Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1043 The Japanese yen fell 0.2% to 142.64 per dollar The offshore yuan was little changed at 7.1487 per dollar The Australian dollar rose 0.1% to $0.6832 The British pound was little changed at $1.2730 Cryptocurrencies Bitcoin rose 0.3% to $42,483.22 Ether rose 0.2% to $2,228.65 Bonds The yield on 10-year Treasuries declined two basis points to 3.87% Japan’s 10-year yield declined 3.5 basis points to 0.595% Australia’s 10-year yield declined four basis points to 3.97% Commodities West Texas Intermediate crude was little changed Spot gold fell 0.1% to $2,065.30 an ounce This story was produced with the assistance of Bloomberg Automation. --With assistance from Akemi Terukina and Joanna Ossinger. More stories like this are available on bloomberg.com ©2023 Bloomberg L.P.
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