Equities Set for Best Week of the Year Post Dovish Tilt – Europe Market Wrap

Following a series of central bank meetings that suggested a shift towards looser policy is underway, stocks were poised for their best week of the year.

MSCI’s global stock index has increased by more than 2% this week, and the S&P 500 is expected to rise by 2.4%, the highest since mid-December. The benchmark for European stocks was on track for its longest weekly winning streak in over ten years. For the fourth day in a row, Treasury yields increased, bringing the 10-Yr yield down nearly 10 basis points since Monday.

Since the Fed meeting midweek stoked expectations that policymakers will implement three interest rate reduction this year to facilitate a soft landing for the US economy, investor appetite has been revived. The confidence was further bolstered by an unexpected easing by the Swiss National Bank and a more dovish approach by Bank of England policymakers, which helped to rally equities and government bonds while depreciating their respective currencies.

US market futures and Europe’s STOXX 600 index both saw slight increases during Friday’s session. In premarket trading, Tesla experienced a 3.3% decline after sources close to the matter revealed that the company had lowered the number of electric vehicles produced at its China plant.

ECB’s Nagel: A June cut has a higher probability than April.