(Bloomberg) — European stocks and US equity futures dropped as investors assessed mixed corporate earnings and studied the latest assessment on the US economy for clues on the path for interest rates.
Most Read from Bloomberg
Autos led declines in the Stoxx Europe 600 index as Renault SA fell the most in almost five months, with concerns over pricing pressure outweighing the French carmaker’s first-quarter sales beat. L’Oreal SA gained after the cosmetics maker reported strong demand. Contracts for the Nasdaq 100 and S&P 500 retreated by more than 0.6%. A region-wide index of Asian stocks edged lower.
The Federal Reserve’s monthly Beige Book survey released on Wednesday showed the US economy “stalled” with narrower access to credit. Fed Bank of New York President John Williams said the recent trend of slowing inflation continues but that price gains remain too high. Trader bets continue to lean toward a rate hike next month.
A measure of dollar strength was steady, while Treasury yields dropped.
“Inflation is not going to go away by itself,” Marija Veitmane, senior multi-asset strategist for State Street Global Markets, said in an interview with Bloomberg Television. “It’s really a question of whether the Fed has enough resolve to break the economy to get inflation down and right now it seems that they still do.”
Elsewhere on the monetary policy front, European Central Bank Governing Council member Klaas Knot said the ECB may need to follow a widely expected hike next month by raising rates in June and July. “It’s too early to talk about a pause,” the Dutch central bank chief told the Irish Times newspaper in an interview published Thursday. “For a pause, I would really need to see a convincing reversal in underlying-inflation dynamics.”
Investors were also digesting mixed earnings out of the US. Tesla Inc. missed profit expectations while International Business Machines Corp. and Morgan Stanley beat forecasts.
In Asia, Taiwan Semiconductor Manufacturing Co. forecast worse-than-anticipated revenue for the current quarter, reflecting a persistent slump in demand for everything from smartphones to server chips. Apple Inc.’s most important chipmaker warned that demand from the mobile and PC industries would remain “soft” for now.
Banks in China kept loan prime rates unchanged after the People’s Bank of China stayed put. An independent review of Australia’s central bank recommended setting up an expert policy board and fewer meetings followed by press conferences.
Elsewhere in markets, Bitcoin dropped below $30,000. Oil fell while gold edged higher after a Wednesday decline pushed the precious metal below $2,000 an ounce.
The drop for US equity futures followed a flat day in New York trading. The CBOE VIX index of volatility to the lowest since 2021. A Bank of America global measure of volatility spanning stocks, rates, currencies and commodities sits at the lowest level since early 2022.
Key events this week:
Eurozone consumer confidence, Thursday
US initial jobless claims, existing home sales, index of leading economic indicators, Thursday
ECB issues report on March policy meeting, Thursday
Fed’s Christopher Waller speaks at cryptocurrency-focused event, Thursday
Fed’s Patrick Harker speaks on “monetary policy and housing”, Thursday
Fed’s Loretta Mester discusses the economic and policy outlook, Thursday
Fed’s Raphael Bostic discusses regional and national economic conditions, Thursday
Fed’s Michelle Bowman and Lorie Logan speak at event, Thursday
PMIs for Eurozone, Friday
Japan CPI, Friday
Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
The Stoxx Europe 600 fell 0.3% as of 8:49 a.m. London time
S&P 500 futures fell 0.7%
Nasdaq 100 futures fell 0.9%
Futures on the Dow Jones Industrial Average fell 0.5%
The MSCI Asia Pacific Index fell 0.2%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0958
The Japanese yen rose 0.1% to 134.55 per dollar
The offshore yuan was little changed at 6.8905 per dollar
The British pound fell 0.1% to $1.2424
Cryptocurrencies
Bitcoin fell 1.2% to $28,900.18
Ether fell 1.5% to $1,950.25
Bonds
The yield on 10-year Treasuries declined three basis points to 3.56%
Germany’s 10-year yield declined four basis points to 2.47%
Britain’s 10-year yield declined two basis points to 3.83%
Commodities
Brent crude fell 1.6% to $81.75 a barrel
Spot gold rose 0.1% to $1,997 an ounce
This story was produced with the assistance of Bloomberg Automation.
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
Source: https://finance.yahoo.com/news/asia-see-cautious-open-mixed-223347388.html