(Bloomberg) — US index futures and European stocks fell as investors took a pause from a rally driven by bets for less hawkish central banks and sought more evidence that inflation is moderating.
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December contracts on the S&P 500 and Nasdaq 100 dropped 0.6% each after the underlying indexes scaled two-week highs on Tuesday. Europe’s Stoxx 600 halted its best three-day advance since November 2020. Oil was little changed before an OPEC+ meeting where a supply cut may be announced. Treasuries slid and the dollar swung between gains and losses.
A growing cohort of money managers is cautioning that expectations for a so-called Federal Reserve pivot are overdone and risk ignoring the economic pain that would underpin such a dovish tilt should policymakers opt for it. With US jobs numbers due Friday and a new earnings-reporting season on the horizon, traders are in a mood to wait and watch for further catalysts.
“A dovish pivot requires more evidence of weaker growth and a decisive fall in inflation,” Emmanuel Cau, the head of European equity strategy at Barclays Plc, wrote in a note. “We doubt equities are out of the woods yet.”
Equities gained ground across Asia as the region’s markets caught up with overnight moves in the US. Hong Kong stocks posted their best rally since March after a one-day break.
Europe’s equity benchmark fell 0.5%, trimming some of the 5.3% advance in the previous three days, as real estate, auto-parts and telecommunications shares slid the most.
US Treasuries fell across the curve, with the 10-year yield adding 4 basis points. The dollar was 0.2% higher after earlier trading down 0.1%.
Wset Texas Intermediate oil futures held above $86 per barrel, while trading at a modest loss. The OPEC+ grouping is set to discuss reducing output by as much as 2 million barrels a day, delegates said before the group meets in Vienna.
Meanwhile, investors’ attention remained focused on Friday’s nonfarm payrolls data, in which the expectations are for an addition of 263,000 jobs in September.
“For the market to continue higher, the jobs data will have to be in line with, or short of expectations,” said Lindsey Bell, chief markets and money strategist at Ally.
Key events this week:
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Eurozone services PMIs, Wednesday
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OPEC+ meeting begins, Wednesday
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Fed’s Raphael Bostic speaks, Wednesday
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The Reserve Bank of New Zealand meets, Wednesday
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Eurozone retail sales, Thursday
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US initial jobless claims, Thursday
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Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
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US unemployment, wholesale inventories, nonfarm payrolls, Friday
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BOE Deputy Governor Dave Ramsden speaks at event, Friday
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Fed’s John Williams speaks at event, Friday
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Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.5% as of 8:31 a.m. London time
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Futures on the S&P 500 fell 0.6%
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Futures on the Nasdaq 100 fell 0.6%
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Futures on the Dow Jones Industrial Average fell 0.6%
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The MSCI Asia Pacific Index rose 1.9%
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The MSCI Emerging Markets Index rose 2%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $0.9955
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The Japanese yen fell 0.2% to 144.43 per dollar
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The offshore yuan rose 0.1% to 7.0311 per dollar
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The British pound fell 0.4% to $1.1429
Cryptocurrencies
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Bitcoin fell 0.5% to $20,231.04
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Ether fell 0.6% to $1,354.1
Bonds
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The yield on 10-year Treasuries advanced five basis points to 3.68%
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Germany’s 10-year yield advanced seven basis points to 1.94%
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Britain’s 10-year yield advanced six basis points to 3.93%
Commodities
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Brent crude fell 0.2% to $91.63 a barrel
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Spot gold fell 0.4% to $1,718.55 an ounce
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