European stocks fell and the dollar strengthened as a fresh set of downbeat data from the euro area and China underscored the relative resilience of the US economy.
(Bloomberg) — European stocks fell and the dollar strengthened as a fresh set of downbeat data from the euro area and China underscored the relative resilience of the US economy.
The US currency gained as much as 0.5% against its Group-of-10 peers, touching the highest level since March. US government debt fell in the first day of trading after Monday’s holiday. Europe’s Stoxx 600 traded down 0.2% after paring a drop of as much as 0.8% and US stock index futures pointed to a retreat at the Wall Street open.
China’s services sector saw the slowest growth this year in August, an industry survey showed, adding to evidence the economic recovery is losing traction and damping earlier optimism over government stimulus. In Europe, the composite purchasing managers’ index undershot expectations, posting a contraction for a third straight month.
“There is real concern for the euro-area picture, with survey data suggesting the economy is sliding into recession,” said Sarah Hewin, head of Europe and Americas research at Standard Chartered. “It raises questions over how aggressive the ECB can be going forward.”
The European Central Bank, which meets next week, faces a quandary over interest rates, given recession fears and above-target inflation.
By contrast, recent data shows the US economy is holding up well and rate cuts may not come any time soon, even though many economists say the Federal Reserve has come to the end of its 18-month long policy-tightening campaign. Goldman Sachs Group Inc. now sees just a 15% probability of a US recession in the coming year, down five percentage points from their previous estimate.
The US currency is the strongest since July against the euro and the pound. Against the yen, it’s approaching the highest since November.
Key events this week:
- US factory orders, Tuesday
- ECB President Christine Lagarde chairs panel focused on central banks and international sanctions at ECB Legal Conference, Tuesday
- Australia GDP, Wednesday
- Eurozone retail sales, Wednesday
- Germany factory orders, Wednesday
- US trade, Wednesday
- Canada rate decision, Wednesday
- Bank of England Governor Andrew Bailey testifies to the UK parliament’s Treasury Select Committee, Wednesday
- Federal Reserve issues Beige Book economic survey, Wednesday
- Boston Fed President Susan Collins speaks on the economy at New England Council, Wednesday
- China trade, forex reserves, Thursday
- Eurozone GDP, Thursday
- US initial jobless claims, Thursday
- Bank of Canada Governor Tiff Macklem to speak on the Economic Progress Report, Thursday
- New York Fed President John Williams participates in moderated discussion at the Bloomberg Market Forum, Thursday
- Atlanta Fed President Raphael Bostic speaks on economic outlook at Broward College, Thursday
- Japan GDP, Friday
- France industrial production, Friday
- Germany CPI, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.2% as of 12:08 p.m. London time
- S&P 500 futures fell 0.2%
- Nasdaq 100 futures fell 0.4%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.8%
- The MSCI Emerging Markets Index fell 0.9%
Currencies
- The Bloomberg Dollar Spot Index rose 0.6%
- The euro fell 0.6% to $1.0736
- The Japanese yen fell 0.5% to 147.25 per dollar
- The offshore yuan fell 0.5% to 7.3090 per dollar
- The British pound fell 0.6% to $1.2550
Cryptocurrencies
- Bitcoin fell 0.3% to $25,746.84
- Ether rose 0.2% to $1,631.9
Bonds
- The yield on 10-year Treasuries advanced five basis points to 4.22%
- Germany’s 10-year yield advanced three basis points to 2.61%
- Britain’s 10-year yield advanced three basis points to 4.49%
Commodities
- Brent crude fell 0.8% to $88.32 a barrel
- Spot gold fell 0.6% to $1,930.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Georgina McKay and Tassia Sipahutar.
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