European stocks were little changed and the euro edged higher as traders braced for the European Central Bank’s interest-rate decision.
(Bloomberg) — European stocks were little changed and the euro edged higher as traders braced for the European Central Bank’s interest-rate decision.
The Stoxx 600 was steady, while S&P 500 futures climbed after Wednesday’s US inflation report was in line with estimates, fanning hopes the Federal Reserve will pause rate hikes. The dollar weakened against its Group-of-10 peers and oil headed for a 10-month high.
Evidence is building that Europe is facing persistent cost pressures that have been made worse by soaring energy prices. Money markets are pricing in a two-thirds chance the ECB raises interest rates by a quarter of a percentage point, a rapid shift from earlier this month where traders were firmly in the camp rates would be held steady.
“The market is split on the ECB right now and we have to acknowledge the hawkish shift in expectations over the last two weeks,” said Geoffrey Yu, senior strategist at BNY Mellon. “The risk-reward heading into the decision is not good for the euro.”
Oil prices are adding to the inflationary concerns, with West Texas Intermediate trading near $89 a barrel and Brent above $92. Demand will eclipse supply by 1.2 million barrels a day on average during the second half, the IEA projected Wednesday.
Elsewhere, shares of Arm Holdings Plc are due to start trading on Thursday on the Nasdaq Global Select Market, after the chip designer priced its initial public offering at $51 a share, the top end of the range. The company raised $4.87 billion, valuing itself at about $54.5 billion in the largest listing of the year.
In Asia, demand for Japanese 20-year bonds at auction was the strongest since May 2020, soothing concerns about a potential normalizing of monetary policy by the Bank of Japan.
Japan’s Nikkei 225 outperformed the region and equities in South Korea and Australia also gained. Hong Kong and mainland China shares fluctuated as concerns remained in the property sector. Country Garden Holdings Co. fell as the deadline approaches for holders of a yuan bond to vote on the company’s repayment extension request.
Key events this week:
- Japan industrial production, Thursday
- European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
- US retail sales, PPI, business inventories, initial jobless claims, Thursday
- China property prices, retail sales, industrial production, Friday
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.1% as of 9:06 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The MSCI Asia Pacific Index rose 0.9%
- The MSCI Emerging Markets Index rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0735
- The Japanese yen rose 0.1% to 147.26 per dollar
- The offshore yuan was little changed at 7.2787 per dollar
- The British pound was little changed at $1.2487
Cryptocurrencies
- Bitcoin rose 0.5% to $26,345.69
- Ether rose 1.1% to $1,621.3
Bonds
- The yield on 10-year Treasuries was little changed at 4.25%
- Germany’s 10-year yield was little changed at 2.65%
- Britain’s 10-year yield was little changed at 4.35%
Commodities
- Brent crude rose 0.7% to $92.55 a barrel
- Spot gold fell 0.1% to $1,905.94 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Matthew Burgess.
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