European Futures Slip as High Yields Sour Mood: Markets Wrap

European Futures Slip as High Yields Sour Mood: Markets Wrap

(Bloomberg) — European stocks looked poised to follow a decline in Asia as U.S. Treasury yields near this year’s high kept risk sentiment in check.

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Euro Stoxx 50 futures slipped 0.4%, while US stock contracts also fell. The MSCI Asia-Pacific index fell to its lowest level in three weeks, with stocks in South Korea and Japan bearing the brunt of the losses.

Global stocks are heading for their worst week since mid-April as the latest comments from Federal Reserve officials renew doubts about the timing of interest rate cuts. High bond yields added to the anxiety, with Treasuries falling across the curve in the previous session due to tepid demand during the sale of $44 billion of seven-year securities.

Investors are preparing for a series of inflation reports from the United States and Europe on Friday to sharpen their outlook for monetary policy.

“The market has fallen for the genius of the bond market and higher yields,” said Tony Sycamore, market analyst at IG Australia Pty Ltd. inflation data tomorrow.

Treasury yields fell slightly in Asian trading after the 10-year rate jumped six basis points in the previous session. The weak auction result increased concerns that financing the U.S. deficit could push up yields at a time when the Fed is in no rush to cut rates. Australian yields have climbed.

An indicator of dollar strength gained for the third session, hitting Asian currencies.

In Japan, the yen gained after weakening beyond 157.52 to the dollar on Wednesday, falling beyond a level that triggered the latest round of suspected action. Domestic 10-year bonds reversed an earlier loss.

Elsewhere, the Chinese yuan was little changed after falling to its lowest level since November on Wednesday. The rand extended its losses as vote counting for South Africa’s elections accelerates.

“Bond yields could rise primarily because of bond supply and the continued massive deficit — not because of concerns about inflation or the strength of the economy,” said Eric Johnston of Cantor Fitzgerald.

In New Zealand, the new government kept its election promise to cut taxes in its first budget, even as the Treasury predicted larger deficits and a delayed return to surplus.

In the corporate world, Chinese authorities are preparing to impose a record fine on PricewaterhouseCoopers LLP for its audit work with the China Evergrande Group, according to sources familiar with the matter. Brookfield is in exclusive talks to acquire a majority stake in Neoen SA in a deal valuing the French renewable energy developer at around €6.1 billion.

In the commodities sector, oil held steady after falling on Wednesday, as traders look to U.S. inventory data and this weekend’s OPEC+ meeting for more clarity on the oil’s outlook. supply and demand.

Key events this week:

  • Eurozone economic confidence, unemployment, consumer confidence, Thursday

  • Initial jobless claims in the United States, GDP, Thursday

  • Fed’s John Williams and Lorie Logan speak Thursday

  • Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

  • China’s official manufacturing and non-manufacturing PMI, Friday

  • Eurozone CPI, Friday

  • US consumer income, spending, PCE deflator, Friday

  • Fed’s Raphael Bostic to speak Friday

Some of the main market movements:

Actions

  • S&P 500 futures fell 0.6% as of 2:23 p.m. Tokyo time

  • Nasdaq 100 futures fell 0.7%

  • The Japanese Topix fell 0.6%

  • Australia’s S&P/ASX 200 fell 0.4%

  • Hong Kong’s Hang Seng fell 1.4%

  • The Shanghai Composite index fell 0.6%

  • Euro Stoxx 50 futures fell 0.4%

Currencies

  • Bloomberg Dollar Spot Index little changed

  • The euro was little changed at $1.0791

  • The Japanese yen rose 0.4% to 157.07 per dollar

  • The offshore yuan was little changed at 7.2676 per dollar.

Cryptocurrencies

  • Bitcoin rose 0.9% to $68,010.32

  • Ether rose 0.6% to $3,772.56

Obligations

Raw materials

  • West Texas Intermediate crude fell 0.2% to $79.11 a barrel

  • Spot gold fell 0.2% to $2,333.95 an ounce

This story was produced with the help of Bloomberg Automation.

–With the help of Masaki Kondo.

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