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Markets Update am

  • Markets edgy ahead of eurozone inflation and unemployment data

  • Bourses hold on gains as traders relax over Fed hikes

  •  agenda: Eurozone jobs and prices data

  • Chinese shares jump, after unexplained plunge

After a mostly positive Asian session, the pan-European Stoxx 600 equity index is up 0.2 per cent as US index futures suggest the S&P 500 will add 3 points to 2,102.

Stocks, dollar and short-term Treasury yields near multi-week highs as markets appear increasingly at ease with the prospect of a summer hike in US interest rates.

The broadly upbeat mood is pressuring the yen and supporting industrial commodity prices, though Brent crude remains below $50 a barrel ahead of Opec’s meeting in a few days.

The chances of a 25 basis point rise in June have gone from virtually nothing a few weeks ago to 30 per cent currently, according to Bloomberg calculations of Fed fund futures.

The shift in expectations has lifted the dollar and government bond yields. The 2-year Treasury yield, which is particularly sensitive to monetary policy perceptions, has returned from a long weekend to jump 5 basis points to 0.93 per cent, close to their highest since mid-March.

The focus over the next few sessions would be US economic data, starting with personal income and spending data on Tuesday, followed by manufacturing numbers and culminating in the non-farm payrolls report on Friday.

In the meantime, economic reports from Japan showed the country’s recovery continued in the second quarter.

Japan’s Nikkei stock index backtracked on earlier losses to end the day up 1 percent, extending a 1.4 percent rally in the previous session. It is up 3.4 percent for May, thanks to a tailwind from a weaker yen.

Industrial production rose 0.3 per cent month on month in April following the earthquake that struck the southern island of Kyushu that month, for a 3.5 per cent yearly pace of decline — both down versus March but comfortably ahead of economists’ forecasts.

 

Chinese shares jump, despite mysterious plunge

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