More broadly, S&P500 futures held Monday’s cash market bounce back above the 5,000 round figure – with eyes now trained on both the earnings season and increasing pessimism about the chances for any Federal Reserve interest rate cut this year.
As Fed officials are now in a blackout period before their next May 1 policy decision, futures pricing has reduced 2024 easing expectations to less than 40 basis points for the first time this year and now only sees an 80% chance of a quarter point rate cut before the November election.
With some $69 billion of two-year Treasuries coming under the hammer later on Tuesday, two-year yields hovered just shy of 5.0%.
Even in the face of more stern warnings from Japanese government officials about potential yen-supporting intervention, the dollar continued to set new 34-year highs against the Japanese currency just under 155.
The Bank of Japan will raise rates again if trend inflation accelerates towards its 2% target as expected, BOJ governor Kazuo Ueda said.
Flash U.S. April business readings will color in the picture further today, with Europe’s equivalent surveys out already and beating forecasts. German business, in particular, unexpectedly returned to expansionary mode this month.
That surprise gave the euro a lift – and knocked the dollar’s wider DXY index back a bit in the process – even though money markets are still more than 50% priced for a European Central Bank rate cut as soon as June.
Despite a miss in the manufacturing sector, the overall British business reading also beat forecasts and lifted sterling off Monday’s five-month lows.
The combination of recent sterling weakness and rising Bank of England rate cut hopes earlier saw Britain’s blue-chip FTSE 100 hit a record high – even though it still lags U.S. and European benchmarks this year and the domestically-focused FTSE250 midcaps remain in the red for 2024.
Elsewhere, China’s mainland stocks continued to underperform worldwide – although Hong Kong gained again on Tuesday amid optimism over proposed reforms aimed at boosting the city’s attractiveness to foreign investors.
Delivery giant Meituan and e-commerce firm JD.com led Tuesday’s gains and rose 8% and 6% respectively.
In Europe, a near 5% gain in Novartis stood out as the Swiss drugmaker raised its full-year outlook.
The wobbly tech sector got a boost from SAP’s 4% rise after the German company reported a 24% jump in first-quarter cloud revenue.
Back on Wall Street, the wait for Tesla’s update will be filled with updates from the likes of Texas Instruments, Visa, UPS, General Motors, Lockheed Martin and Halliburton.
