(Bloomberg) — Stocks in Europe retreated along with US equity futures, while bond yields rose as yet another a hot inflation print in the the UK brought price pressures back in focus ahead of data for the euro region.
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The Stoxx Europe 600 index slipped 0.2% at the open, with the technology sector leading the decline. ASML Holding NV dropped more than 3% after the Dutch chip maker after reporting results that raised concerns about the demand outlook. Contracts on the rates-sensitive Nasdaq 100 fell about 0.5%, while those on the S&P 500 were down 0.3% ahead of the next swathe of US bank earnings reports.
Treasury two-year yields, which are more reactive to imminent policy moves than longer maturities, climbed 5 basis points to 4.24%, while the yield on 10-year bonds rose 4 basis points. The UK two-year yield jumped 12 basis points and the pound strengthened after data showed UK inflation beat estimates in March as prices rose by 10.1% on a yearly basis.
Traders will be monitoring inflation data from the euro area that will determine European Central Bank’s monetary policy path going forward. ECB Chief Economist Philip Lane said Tuesday another increase in interest rates would be appropriate in May, but a more detailed picture of inflation would be needed.
“Two more hikes from here, getting to 3.5%, that will get the ECB to a stance that we think would be close to where it needs to be given the current circumstances,” Wouter Sturkenboom, chief investment strategist for EMEA & Asia Pacific at Northern Trust Asset Management, said on Bloomberg Television.
MSCI Inc.’s Asia Pacific Index declined 0.4%, while the Hang Seng China Enterprises Index slid as much as 1.5% before paring losses. Futures on the S&P 500, along with those on the Nasdaq 100 and Euro Stoxx 50 all declined.
Over the US, Bank of Atlanta President Raphael Bostic told CNBC he favors raising interest rates one more time and then holding them above 5% for some time to curb inflation. His St. Louis counterpart James Bullard told Reuters he favors getting rates into a 5.5%-to-5.75% range. The benchmark currently sits between 4.75% and 5%.
Swaps are pricing in a quarter-point hike by the Fed in May, with rate cuts starting to take place in July.
“That might be too early,” Jonathan Liang, head of investment specialists for Asia ex-Japan at JPMorgan Asset Management, said on Bloomberg Television. “There could be a pivot, maybe towards the end of this year, but not maybe as soon as what the market is currently pricing.”
Despite the hawkish comments by the Fed officials, the Cboe Volatility Index stayed at the lowest since January 2022, remaining below 17. Bank of America’s GFSI Market Risk Index — a gauge of global volatility across assets — held near the lowest since February 2022.
Japan’s Sumitomo Mitsui Financial Group Inc. sold yen-denominated Additional Tier 1 bonds, becoming the first major global bank to issue such debt since the collapse of Credit Suisse Group AG last month.
Elsewhere in markets, Bitcoin held slightly above the closely watched $30,000 level. Oil steadied as investors weighed signs of shrinking US crude stockpiles against concerns over an uneven demand recovery.
Gold dipped and iron ore declined after Chinese authorities vowed to curb “unreasonable” price gains in their latest move to crack down on market speculation.
Key events this week:
Eurozone CPI, Wednesday
Fed releases Beige Book, Wednesday
Fed’s John Williams gives a speech, Wednesday
Fed’s Austan Goolsbee is interviewed on NPR, Wednesday
China loan prime rates, Thursday
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 0.2% as of 8:18 a.m. London time
S&P 500 futures fell 0.3%
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 0.6%
The MSCI Emerging Markets Index fell 0.7%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0969
The Japanese yen fell 0.3% to 134.52 per dollar
The offshore yuan fell 0.2% to 6.8977 per dollar
The British pound rose 0.3% to $1.2465
Cryptocurrencies
Bitcoin fell 1.2% to $30,071.86
Ether fell 1% to $2,071.79
Bonds
The yield on 10-year Treasuries advanced three basis points to 3.60%
Germany’s 10-year yield advanced three basis points to 2.51%
Britain’s 10-year yield advanced seven basis points to 3.81%
Commodities
Brent crude fell 0.6% to $84.25 a barrel
Spot gold fell 0.6% to $1,994.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao and Naoto Hosoda.
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Source: https://finance.yahoo.com/news/asia-stocks-set-mixed-open-222656385.html