Stocks were set to resume monthly declines on concern that restrictive monetary policy to tackle price pressures will harm the global economy. A dollar gauge and Treasury yields fluctuated.
(Bloomberg) — Stocks were set to resume monthly declines on concern that restrictive monetary policy to tackle price pressures will harm the global economy.
A dollar gauge and Treasury yields fluctuated.
European shares reversed earlier gains to trade at the lowest level in more than six weeks. Euro-area inflation accelerated to another all-time high, strengthening the case for the European Central Bank to consider a jumbo interest-rate hike when it meets next week.
US futures were little changed around a one-month low.
Robust labor demand and consumer confidence data added to the case for sharp interest-rate hikes to tackle inflation, while Federal Reserve officials reiterated their determination to curb price pressures.
A deepening yield curve inversion points to fears that the Fed will trigger a recession.
Oil headed for a third monthly drop — the longest losing run in more than two years — hampered by the likelihood of slower global growth.
European natural gas advanced after a two-day slump, with traders weighing risks to Russian supplies against the continent’s drastic efforts to curb the energy crisis.
Market bets on a shallower trajectory for Fed tightening are receding, raising the prospect of more losses for stocks and bonds in an already difficult year.
Investors are scouring incoming data for clues on the policy path, with August US jobs figures on Friday the next key report.
“What’s clear is that predicting this market is not clean cut,” Angeline Newman, a managing director at UBS Global Wealth Management, said on Bloomberg Television.
“We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine.”
Fed officials again stressed their commitment to defeating inflation while remaining vague on how big their policy move will be next month.
New York Fed Chief John Williams said rates will need to be held in restrictive territory for “some time,” adding that this meant through 2023 — the latest official to push back on financial-market expectations of cuts later next year.
“We’re still going to see some pretty volatile times and maybe some further downside for equities in the short term,” Steve Brice, chief investment officer at Standard Chartered Wealth Management, said on Bloomberg Television.
Utilities led declines in Europe on Wednesday, extending their selloff to a fourth session as investors fret over Russian gas supplies at the start of a three-day halt of the key Nord Stream pipeline.
Investors are contending with a European energy crisis as well as mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones.
An Asian stock gauge climbed in a mixed day that saw tech shares advance but Japan’s bourses retreat.
BYD Co. plunged in Hong Kong after Warren Buffett’s Berkshire Hathaway Inc. trimmed its stake in the electric vehicle maker.
Traders were evaluating the latest Chinese data, which indicated factory activity shrank for a second month.
Power shortages, a property sector crisis and Covid outbreaks all took a toll.
Here are some key events to watch this week:
- ECB Governing Council members due to speak at event Tuesday through Sept.
2
- Euro-area CPI, Wednesday
- Russia’s Gazprom set to halt Nord Stream pipeline gas flows for three days of maintenance, Wednesday
- Cleveland Fed President Loretta Mester due to speak, Wednesday
- China Caixin manufacturing PMI, Thursday
- US nonfarm payrolls, Friday
- UK leadership ballot closes Friday.
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Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.8% as of 10:35 a.m.
London time
- Futures on the S&P 500 fell 0.1%
- Futures on the Nasdaq 100 rose 0.1%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The MSCI Asia Pacific Index rose 0.6%
- The MSCI Emerging Markets Index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $0.9992
- The Japanese yen was little changed at 138.76 per dollar
- The offshore yuan rose 0.2% to 6.9081 per dollar
- The British pound fell 0.2% to $1.1631
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.13%
- Germany’s 10-year yield advanced five basis points to 1.56%
- Britain’s 10-year yield advanced 14 basis points to 2.84%
Commodities
- Brent crude fell 3.1% to $96.28 a barrel
- Spot gold fell 0.6% to $1,712.95 an ounce
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