Stocks were mixed at the start of another busy week of earnings and key central bank decisions.
Europe’s Stoxx 600 index fluctuated, while US futures declined after posting their best two-week rally since November 2020. Chipmakers and Chinese stocks listed in the US fell in premarket trading.
The dollar rose and the yen fell as traders positioned for another large interest-rate hike by the Federal Reserve this week, widening the policy divergence with the Bank of Japan. The euro and the pound also declined.
The yield on the 10-year Treasuries rose to 4.06% after surging by nine basis points on Friday. Yields on UK gilts also advanced ahead of what could be the Bank of England’s biggest interest-rate hike in more than 30 years.
Meanwhile, wheat soared after Russia pulled out of a grain-export deal even as vessels continued to depart from Ukraine.
Euro-area inflation surged to a fresh all-time high, while the bloc’s economy lost momentum — reinforcing fears that a recession is now all-but unavoidable. That’s after a core gauge of US inflation accelerated in September, bolstering the case for more tightening.
Fed Chairman Jerome Powell “should be a bit less hawkish”at his press conference on Wednesday compared to after the last meeting, according to Yardeni Research. With the expectation that another 75 basis points is penciled in this week, “Powell will have to acknowledge that the federal funds rate is now further into restrictive territory and will be even more so come the FOMC’s December meeting,” it said in a note.
Economists surveyed by Bloomberg expect Fed officials will maintain its hawkish stance, laying the groundwork for interest rates reaching around 5% by March 2023, potentially leading to a US and global recession.
Brazilian assets are set to weaken on Monday after Luiz Inacio Lula da Silva won the presidential election. The extent of the market drop will depend on whether President Jair Bolsonaro will concede as a contested election would likely trigger larger losses.
European natural gas fell after two days of gains as unseasonably warm weather reduces demand and eases concerns about shortages for the winter and oil edged lower as weak economic data from China fanned concerns about energy demand, but it was still set for the first monthly advance since May on OPEC+’s planned supply cuts.
Gold headed for its seventh straight month of declines, the longest losing streak since at least the late 1960s.
Key events this week:
- Companies reporting earnings this week include: Moderna, Pfizer, Airbnb, AIG, Maersk, Barrick Gold, BMW, Bharti Airtel, BP, ConocoPhillips, Estee Lauder, Ferrari, ING, Intercontinental Exchange, KKR, Mitsui, Newmont, Petrobras, Qualcomm, Restaurant Brands, Saudi Arabian Oil, SoftBank, Sony, Starbucks, Toyota, Uber and Yum! Brands.
- Reserve Bank of Australia policy decision, Tuesday
- US construction spending, ISM manufacturing index, Tuesday
- EIA crude oil inventory report, Wednesday
- Federal Reserve rate decision, Wednesday
- US MBA mortgage applications, ADP employment, Wednesday
- Bank of England rate decision, Thursday
- US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
- ECB President Christine Lagarde speaks, Thursday
- US nonfarm payrolls, unemployment, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was little changed as of 10:15 a.m. London time
- Futures on the S&P 500 fell 0.5%
- Futures on the Nasdaq 100 fell 0.7%
- Futures on the Dow Jones Industrial Average fell 0.4%
- The MSCI Asia Pacific Index fell 1.7%
- The MSCI Emerging Markets Index fell 1.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.3% to $0.9936
- The Japanese yen fell 0.6% to 148.49 per dollar
- The offshore yuan fell 0.7% to 7.3172 per dollar
- The British pound fell 0.5% to $1.1553
Cryptocurrencies
- Bitcoin rose 0.2% to $20,731.43
- Ether rose 1.4% to $1,618.01
Bonds
- The yield on 10-year Treasuries advanced five basis points to 4.06%
- Germany’s 10-year yield advanced four basis points to 2.15%
- Britain’s 10-year yield advanced one basis point to 3.49%
Commodities
- Brent crude fell 1.3% to $94.52 a barrel
- Spot gold fell 0.4% to $1,637.73 an ounce
Source By: Bloomberg