US stock futures posted gains on Thursday as traders turned their attention to corporate news after realizing that rate cuts may be delayed beyond the first quarter.
Stock market Nasdaq 100 and S&P 500 Index futures rose 0.6% and 0.3%, respectively. The Stoxx Europe 600 index rose slightly, after falling nearly 2% in the first three days of the week. China's CSI 300 index rose as much as 1.4% as a surge in ETF trading showed the involvement of government funds.
Chipmakers gained in US pre-market trading after Taiwan Semiconductor Manufacturing Co., a key supplier to Apple Inc. and Nvidia Inc., said it expects strong growth this quarter. Microchip Technology Inc., Advanced Micro Devices Inc. and ON Semiconductor Corp. each adding more than 2%. The Boeing Co. up after winning an order for 150 of the troubled 737 Max planes from India's newest carrier.
Signs that European policymakers expect a rate cut as early as June helped calm markets, along with indications that Chinese government funds are bailing out equities hit by a sluggish economy.
Technology stocks fared better, with ASML Holding NV up around 2% and ASM International NV jumping more than 4%.
Although some structural factors supporting corporate earnings in 2023 will remain, investors should not expect too much, said Ekaterina Iliouchenko, senior portfolio manager at Union Investment Privatfonds GmbH in Frankfurt.
Bonds jumped after extended selling on Wednesday. Policy-sensitive two-year yields fell four basis points after jumping 14 basis points on Wednesday, the biggest one-day gain since June.
The decline in bond prices reflects a change in investor expectations for the Federal Reserve's rate cut in March. There were indications that such reductions fell below 60% on Wednesday for the first time since mid-December.
The drop followed comments from Fed policymakers this week that defied market expectations for an imminent tapering and better-than-expected retail sales data on Wednesday. Strong consumer spending helped boost the economy in recent weeks, the Fed said in its Beige Book survey
"If US rates fall, then the surge in consumer spending is likely to continue, but if inflation surprises again, then it won't," said Michel Danechi, portfolio manager at Vedra Partners.
Meanwhile, European Central Bank President Christine Lagarde and several other policymakers signaled the possibility of a rate cut around mid-year, when they will know more about inflation, wages, and economic developments and the impact on supply chains by Yemen's Houthi rebels.
