(Bloomberg) — Stocks took a breather on Monday as investors awaited key data later this week that may cast light on the outlook for interest rates on both sides of the Atlantic.
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The Stoxx Europe 600 index was little changed posting after its best weekly return since January amid optimism the European Central Bank is poised to ease policy as soon as next month. Futures on the S&P 500 and Nasdaq 100 edged higher. Treasury yields and the dollar were stable.
All eyes will be on US consumer-price numbers due Wednesday after data last week pointed to an economy that is slowing amid stubborn inflation, posing a challenge to the outlook of Federal Reserve policy. First-quarter GDP and employment data for the euro region are also due Wednesday.
“Market participants will be keeping a close eye on US CPI out on Wednesday to hopefully gain some insight into the Fed’s next move,” said Matete Thulare, head of FX execution at Rand Merchant Bank in Johannesburg. “After last month’s data and continued hawkish speak from Fed officials, interest rates in the US are now likely only to come lower in the third quarter of the year.”
The euro-area economy, on the other hand, will expand more quickly than previously thought this year as the bloc’s biggest member, Germany, exits more than a year of near-stagnation, a Bloomberg poll of analysts showed. The results capture the improving mood in the region, with first-quarter GDP readings surprising to the upside and inflation is receding toward 2%.
Among individual movers in Europe, Diploma Plc jumped as much as 11% after the building-equipment maker reported an improved operating margin and increased guidance.
Asian stocks were mixed. Hong Kong’s equity benchmark climbed to the highest since August, and mainland China equities also rose. But shares in South Korea, Japan and Australia fell.
News of China’s plan to sell ultra-long special bonds boosted sentiment after weak data from the country published over the weekend had led to initial Asian stock losses. The specter of further US-China trade tensions also weighed on equities with a report on how much President Biden is set to increase tariffs on Chinese electric vehicles.
“You are looking at a slightly muddied growth outlook” for China, Sonal Desai, chief investment officer at Franklin Templeton, said in an interview on Bloomberg Television. Regardless of who gets elected in the US presidential election in November, we are going to see an escalation of US-China trade tensions, he said.
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Oil steadied — erasing an early drop at the week’s open — on optimism China’s bond plan may boost growth, and traders assessed the willingness of OPEC+ to agree to extend supply curbs at its upcoming policy meeting. Iron ore wall declines and copper extended gains.
Some key events this week:
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Euro-area finance ministers meet in Brussels, Monday
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Australia 2024-25 budget, Tuesday
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Japan PPI, Tuesday
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Germany CPI, ZEW survey expectations, Tuesday
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UK jobless claims, unemployment, Tuesday
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US PPI, Tuesday
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Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot speak, Tuesday
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China rate decision, Wednesday
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Eurozone industrial production, GDP, Wednesday
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US CPI, retail sales, business inventories, empire manufacturing, Wednesday
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Australia unemployment, Thursday
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Japan GDP, industrial production, Thursday
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China property prices, retail sales, industrial production, Friday
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Eurozone CPI, Friday
Stocks
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The Stoxx Europe 600 was little changed as of 8:24 am London time
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.2%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 0.2%
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The MSCI Emerging Markets Index rose 0.4%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0774
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The Japanese yen was little changed at 155.81 per dollar
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The offshore yuan fell 0.1% to 7.2419 per dollar
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The British pound was little changed at $1.2522
Cryptocurrencies
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Bitcoin rose 0.7% to $61,703.21
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Ether rose 0.2% to $2,928.98
Bonds
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The yield on 10-year Treasuries declined one basis point to 4.48%
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Germany’s 10-year yield declined two basis points to 2.50%
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Britain’s 10-year yield declined three basis points to 4.14%
Commodities
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Brent crude was little changed
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Spot gold fell 0.4% to $2,350.31 an ounce
This story was produced with the assistance of Bloomberg Automation.
—With assistance from Ishika Mookerjee.
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