Stocks in Europe gained on Wednesday 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 gained on Wednesday 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 edged higher 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. 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.
Gains for US stocks were helped along by wage cost data that undershot forecasts. Separate figures showed the US housing market continued to cool. Another report highlighted consumer confidence unexpectedly falling. The encouraging signs indicate the Fed’s rate hikes over the past year have begun to curtail inflation, but still-loose financial conditions are complicating the Fed’s task.
“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.”
Consumer-inflation and PMI data for the euro area 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. Crypto, stocks and bonds have jumped in the new year on expectations of a Fed pivot to slower interest-rate hikes and eventual cuts as high inflation cools.
Iron ore held near a seven-month high as major exporter Vale SA announced lower-than-expected fourth-quarter production, while oil edged higher.
Key events this week:
- Eurozone Manufacturing PMI, 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 0.3% as of 8:20 a.m. London time
- S&P 500 futures fell 0.2%
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The MSCI Asia Pacific Index rose 0.7%
- The MSCI Emerging Markets Index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0874
- The Japanese yen was little changed at 130.20 per dollar
- The offshore yuan rose 0.1% to 6.7487 per dollar
- The British pound was unchanged at $1.2320
Cryptocurrencies
- Bitcoin rose 0.3% to $23,027.74
- Ether fell 0.3% to $1,572.08
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.49%
- Germany’s 10-year yield declined one basis point to 2.27%
- Britain’s 10-year yield declined three basis points to 3.30%
Commodities
- Brent crude rose 0.5% to $85.87 a barrel
- Spot gold fell 0.2% to $1,924.43 an ounce
This story was produced with the assistance of Bloomberg Automation.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.