(Bloomberg) — US index futures and European stocks fell as investors scaled down their optimism for less hawkish central banks and sought more evidence that inflation is moderating.
December contracts on the S&P 500 and Nasdaq 100 dropped at least 1% each after the underlying indexes scaled two-week highs on Tuesday. Europe’s Stoxx 600 halted its best three-day advance since November 2020. Treasuries slid and the dollar extended gains. Twitter Inc. retreated in premarket New York trading, sliding further below Elon Musk’s offer price.
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 1%, trimming some of the 5.3% advance in the previous three days, as real estate, auto-parts and telecommunications shares slid the most.
In early New York trading, Twitter slipped 0.6% to $51.69, compared with Musk’s offer price of $54.20. The move came after the billionaire revived his bid to buy the social-media company at the original price, thus seeking to avoid a protracted legal battle.
US Treasuries fell across the curve, with the 10-year yield adding 7 basis points. The dollar was 0.4% higher after earlier trading down 0.1%.
Wset Texas Intermediate oil futures posted a modest loss, still holding above $86 per barrel. 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:
OPEC+ meeting begins, Wednesday
Fed’s Raphael Bostic speaks, Wednesday
The Reserve Bank of New Zealand meets, Wednesday
Eurozone retail sales, Thursday
US initial jobless claims, Thursday
Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
US unemployment, wholesale inventories, nonfarm payrolls, Friday
BOE Deputy Governor Dave Ramsden speaks at event, Friday
Fed’s John Williams speaks at event, Friday
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Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1% as of 9:27 a.m. London time
Futures on the S&P 500 fell 1%
Futures on the Nasdaq 100 fell 1.1%
Futures on the Dow Jones Industrial Average fell 0.9%
The MSCI Asia Pacific Index rose 1.8%
The MSCI Emerging Markets Index rose 1.9%
Currencies
The Bloomberg Dollar Spot Index rose 0.4%
The euro fell 0.6% to $0.9930
The Japanese yen fell 0.2% to 144.46 per dollar
The offshore yuan fell 0.2% to 7.0532 per dollar
The British pound fell 0.8% to $1.1387
Cryptocurrencies
Bitcoin fell 1.2% to $20,094.56
Ether fell 1.4% to $1,343.51
Bonds
The yield on 10-year Treasuries advanced seven basis points to 3.71%
Germany’s 10-year yield advanced nine basis points to 1.96%
Britain’s 10-year yield advanced nine basis points to 3.96%
Commodities
Brent crude was little changed
Spot gold fell 0.8% to $1,711.48 an ounce
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