(Bloomberg) — European stock futures fell as traders turned their attention to US inflation data due Tuesday for cues on the timing of future Federal Reserve interest-rate cuts.
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The Euro Stoxx 50 contract slid 0.5% and futures on the S&P 500 edged lower. The MSCI Asia Pacific Index dropped for the first time in four sessions after Japanese shares slid the most since October, with the Topix Index falling more than 2%, as growing speculation the nation’s central bank will raise interest rates lifted the yen and hurt exporters.
The yen hovered just below the 147-handle against the dollar, extending last week’s 2% rally against the US currency — its best weekly gain since July. The currency looks poised to test the 145 per dollar mark and a break of that level may spur a quick move toward 140, according to Amir Anvarzadeh, a strategist at Asymmetric Advisors Pte.
“The market’s reaction seems to suggest that a lot has been riding on weak yen to continue to support multinationals rather than bets on changing corporate governance, which has been the trigger behind the more positive Japan narrative,” he said.
Chinese equities bucked the gloom, with solar shares extending their recent gains as speculation the government may relax caps on renewable installation improved the outlook for the sector. Shares also rose on a report that Chinese regulators met financial institutions to ask large banks to enhance financing support for the property developer.
Read more: World’s Negative Interest Rate Experiment Nears Its End in Japan
US futures declined following losses on Wall Street at the end of last week, where both the S&P 500 and the Nasdaq 100 slipped. Treasuries traded steady.
Soft Landing
Tuesday’s US consumer price index figures will dominate the economic data reports this week. The core prices gauge is seen rising 0.3% in February from a month earlier, and 3.7% on a year-over-year basis — which would be the smallest annual rise since April 2021.
Further moderation in US prices would support the disinflation narrative that broadly remains in tact, despite a pullback in the number of Federal Reserve rate cuts expected this year. Swaps pricing shows three cuts are anticipated in 2024, down from six at the start of the year.
In commodities, gold rose toward a record on the Fed outlook, while oil held a loss ahead of reports from OPEC and the IEA this week that may provide clues on the demand outlook.
Key Events This Week:
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CPI reports for Argentina, Brazil, Germany, India, US, Tuesday
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UK jobless claims, unemployment, Tuesday
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Japan PPI, Tuesday
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India industrial production, Tuesday
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Mexico international reserves, industrial production, Tuesday
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Philippines trade, Tuesday
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Turkey industrial production, current account, Tuesday
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EU finance ministers meet in Brussels, Tuesday
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ECB Governing Council Member Robert Holzmann speaks, Tuesday
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Eurozone, UK industrial production, Wednesday
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India trade, Wednesday
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South Korea jobless rate, Wednesday
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ECB Governing Council member Yannis Stournaras speaks, Wednesday
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Swedish Riksbank First Deputy Governor and Deputy Governor speak, Wednesday
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Saudi Arabia, Spain CPI, Thursday
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US PPI, retail sales, initial jobless claims, business inventories, Thursday
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Australia Treasurer Jim Chalmers delivers pre-budget address, Thursday
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Canada housing starts, Friday
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China property prices, Friday
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France, Italy, Poland CPI, Friday
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Indonesia trade, Friday
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Japan tertiary index, Friday
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New Zealand PMI, Friday
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Philippines overseas remittances, Friday
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Sri Lanka GDP
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US industrial production, University of Michigan consumer sentiment, Empire Manufacturing, Friday
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Japan’s largest union federation announces results of annual wage negotiations, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 6:40 a.m. London time
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S&P/ASX 200 futures rose 0.1%
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Hong Kong’s Hang Seng rose 1.3%
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The Shanghai Composite rose 0.6%
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Euro Stoxx 50 futures fell 0.5%
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Nasdaq 100 futures fell 0.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was unchanged at $1.0939
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The Japanese yen was little changed at 146.99 per dollar
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The offshore yuan rose 0.1% to 7.1917 per dollar
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The Australian dollar fell 0.1% to $0.6615
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The British pound was little changed at $1.2852
Cryptocurrencies
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Bitcoin fell 1.2% to $68,622.38
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Ether fell 1.6% to $3,845.24
Bonds
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The yield on 10-year Treasuries was little changed at 4.07%
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Japan’s 10-year yield advanced three basis points to 0.760%
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Australia’s 10-year yield declined two basis points to 3.95%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu.
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