Stocks in Europe edged higher while US equity futures slipped on a day abounding with risks including key economic data, company earnings and the Federal Reserve policy meeting.
(Bloomberg) — Stocks in Europe edged higher while US equity futures slipped on a day abounding with risks including key economic data, company earnings and the Federal Reserve policy meeting.
The Stoxx Europe 600 index pared early gains to hold a modest advance Wednesday after closing January on a high note with a 6.7% gain, the best start to a year since 2015. Futures on the S&P 500 and Nasdaq 100 ticked lower after the Nasdaq jumped more than 10% in a January rebound unseen in more than two decades. An index of global stocks excluding the US is making history with a gain of 8.6% in January — the best start to a year on record.
The stellar rally has set equity markets up for a showdown with the Fed as traders position for a pivot which Chair Jerome Powell and his colleagues may not be ready to deliver. Wage cost data that undershot forecasts, a cooling housing market dwindling consumer confidence suggest the Fed’s rate hikes over the past year have begun to curtail inflation, but still-loose financial conditions are complicating the central bank’s task.
Treasury yields drifted lower and the dollar was steady before the Fed statement, where it’s forecast to unveil a 25 basis point rate increase.
“The outcomes for inflation are looking better than they did a few months ago, but the war against inflation is far from won,” Aninda Mitra, Head of Asia Macro and Investment Strategy for BNY Mellon said in an interview with Bloomberg Television. “Wages are still high, the jobs market is still tight.”
Manufacturing PMI measures showed the euro area is still in contractionary territory, while consumer-inflation data later Wednesday will add to the picture before Thursday’s European Central Bank rate decision.
Meanwhile, Adani Group stocks resumed their selloff after the share sale by the Indian conglomerate’s flagship firm failed to turn sentiment from Hindenburg Research’s fraud allegations. In one bright spot for the group, nearly all dollar bonds issued by Adani companies extended gains into a second day.
Elsewhere in markets, Bitcoin added slightly to its near 40% rally this year, with a test ahead when the Fed decision comes. Iron ore held near a seven-month high as major exporter Vale SA announced lower-than-expected fourth-quarter production, while oil edged higher. Crude oil edged higher.
Key events this week:
- Eurozone CPI, unemployment, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- FOMC rate decision, Fed Chair Jerome Powell press conference, Wednesday
- Earnings Wednesday include: Meta Platforms and Peloton Interactive
- Eurozone ECB rate decision, President Christine Lagarde press conference, Thursday
- UK BOE rate decision, Thursday
- US factory orders, initial jobless claims, US durable goods, Thursday
- Earnings Thursday include: Alphabet, Apple, Amazon, Qualcomm and Deutsche Bank and Santander
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 9:18 a.m. London time
- S&P 500 futures fell 0.3%
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average fell 0.3%
- The MSCI Asia Pacific Index rose 0.7%
- The MSCI Emerging Markets Index rose 0.9%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.2% to $1.0883
- The Japanese yen rose 0.1% to 129.90 per dollar
- The offshore yuan rose 0.1% to 6.7485 per dollar
- The British pound was little changed at $1.2318
Cryptocurrencies
- Bitcoin rose 0.2% to $22,992.09
- Ether fell 0.3% to $1,572.54
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.47%
- Germany’s 10-year yield declined three basis points to 2.26%
- Britain’s 10-year yield declined four basis points to 3.29%
Commodities
- Brent crude rose 0.3% to $85.74 a barrel
- Spot gold fell 0.2% to $1,924.42 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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