European futures rise ahead of major US indicators: markets fall

(Bloomberg) — European stock futures edged higher as traders positioned themselves ahead of this week’s U.S. inflation data and the Federal Reserve’s monetary policy decision.

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Contracts on the Euro Stoxx 50 index rose 0.2% even as most Asian stocks fell. Treasuries rose in Asia, while Bloomberg’s dollar gauge advanced for a fourth day.

European stocks fell on Monday after French President Emmanuel Macron called a legislative vote following a crushing defeat in European Parliament elections. Investors will be watching for UK jobs data released on Tuesday, which could impact the Bank of England’s policy decision next week.

Chinese stocks led losses in Asia on concerns over a weak real estate sector and uncertain growth prospects, with mainland China and Hong Kong benchmarks both heading to their lowest closing levels since April. Shares linked to electric vehicle makers fell ahead of the European Commission’s decision on interim duties expected this week, while tourism-related companies fell due to disappointing travel demand during the recent Festival holidays. dragon boats.

“The Hang Seng Index remains weak as market participants want to see more evidence of an upcoming recovery trend, but incoming data has been more mixed than reassuring,” wrote Jun Rong Yeap, market strategist at IG Asia Pte, in a customer note. . “This week, eyes will be on inflation data from China, where positive consumer price growth could be expected to reflect some stabilization in domestic demand.”

Fed decision

Wall Street’s top trading desks, from JPMorgan Chase & Co. to Citigroup Inc., are urging investors to prepare for a possible stock market shakeout after U.S. consumer price data and the decision to the Fed on rates, expected Wednesday.

The Fed is widely expected to keep borrowing costs unchanged, but officials’ rate forecasts are less certain. A majority of 41% of economists expect policymakers to report two reductions in their “dot plot”, while an equal number expect forecasts to show just one reduction or no reduction at all.

“The interest rate guessing game continues,” said Chris Larkin at Morgan Stanley’s E*Trade. “Even the most favorable inflation numbers probably won’t prompt the Fed to act before September.”

Investors are also bracing for a policy decision from the Bank of Japan on Friday. The BOJ is expected to discuss scaling back bond purchases at the meeting, with some economists predicting the central bank will also lay the groundwork to raise rates next month.

In the commodities sector, oil maintained its strongest rise since March, ahead of the release of an OPEC report that will provide insight into the market outlook. Gold fell as traders looked to this week’s Fed meeting for more clues on when it might pivot toward monetary easing. Copper fell to its lowest level in more than a month, while iron ore prices fell to their lowest level in two months.

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