After recording their largest rise of the year on Tuesday, European equities faltered as gloomy corporate news reduced hopes for interest rate increases and Chinese economic stimulus.
Following Tuesday’s nearly 2% increase, the Stoxx Europe 600 index fell, with LVMH falling as much as 7% as the luxury goods manufacturer announced declining sales, a warning that the post-pandemic luxury boom is receding. Burberry Group Plc, Peers Richemont, and Christian Dior SE all had declines of more than 4%. Following the early termination of an Ozempic kidney trial, which analysts interpreted negatively for the renal-dialysis provider, Fresenius Medical Care AG & Co. KGaA saw a more than 20% decline.
Following a 0.5% increase on Tuesday in the S&P 500 and the Nasdaq 100, US stock futures saw some volatility. After rising for a fifth day, an Asian equity index saw its longest winning run since early September.
Fed Bank of San Francisco President Mary Daly stated ahead of the meeting minutes for September, which are due on Wednesday, that the central bank “doesn’t have to do as much” due to tighter financial conditions. This is the latest in a series of softer remarks that suggested interest rate hikes might be on hold for the time being. That followed a Bloomberg article claiming that China is thinking of increasing its budget deficit in anticipation of further stimulus being unveiled by the government.
According to Bloomberg Economics’ Anna Wong, investors will be looking for any clues in the Fed minutes that would signal the central bank might not go with the most recent raise that was projected in its economic projections.
According to Ben Jeffery of BMO Capital Markets, “policymakers have begun to acknowledge a lesser need for further policy action given financial conditions have tightened considerably following the recent surge in Treasury yields.” “This admission might have eased concerns about the necessity of further rate increases.”
Amidst the largest one-day falls in US government bond yields this year, ten-year Treasuries saw a little increase on Tuesday. A week ago, Fed swaps indicated a 60% chance that the Fed would rise by December; now, they indicate a 60% chance that it will remain on hold.
Following a fifth consecutive session of falls, the Bloomberg dollar index showed minimal movement. The developing market currencies of Asia saw gains, with the Thai baht and Korean won leading the way.
Global investors monitored geopolitics closely as well. US President Joe Biden promised to provide Israel all the help it needs, including arms shipments and intelligence support.
Following its spike earlier this week, oil continued to rise as the Israel-Hamas conflict remained under control and Saudi Arabia promised to support market stability. Gold held stable at or close to its peak this month.
Returning to Asia, the Kospi benchmark from South Korea led the regional surge and was on track to record the most gains in nine months. The biggest increase came from Samsung Electronics Co. as traders concentrated on a more limited profit decline from the chip giant.
NATO defence ministers convened on Wednesday in Brussels
OPEC and other member state officials will be present at Russia Energy Week in Moscow on Wednesday.
US PPI on Wed.
minutes of the Fed’s Wednesday, September policy meeting
Raphael Bostic and Michelle Bowman of the Fed talk at different events on Wednesday.
orders for machinery from Japan, PPI, Thursday
Asahi Noguchi of the Bank of Japan speaks on Thursday.
Thursday’s industrial production in the UK
US first claims for unemployment, CPI, Thursday
Thursday, the European Central Bank releases the minutes of its September policy meeting.
Raphael Bostic of the Fed speaks on Thursday.
China trade, PPI, and CPI on Friday
Industrial production in the Eurozone, Friday
Friday’s US University of Michigan consumer mood
Friday marks the beginning of the quarterly earnings season with results from Citigroup, JPMorgan, Wells Fargo, and BlackRock.
G20 finance ministers and central bankers convene on Friday as part of an IMF meeting.
Speaking on an IMF panel on Friday are ECB President Christine Lagarde and IMF Managing Director Kristalina Georgieva.
Patrick Harker of the Fed speaks on Friday.
As of 8:22 a.m. London time, not much had changed on the Stoxx Europe 600.
Futures for the S&P 500 increased by 0.1%.
Naked 100 futures increased by 0.2%.
The Dow Jones Industrial Average futures saw minimal movement.
The 0.9% increase in the MSCI Asia Pacific Index
Rising 1.3% was the MSCI Emerging Markets Index.
Money Types
Little changed in the Bloomberg Dollar Spot Index
With the euro at $1.0610, not much changed.
Little changed, the value of the Japanese yen was 148.84 per dollar.
The offshore yuan dropped to 7.2972 per dollar, down 0.1%.
At $1.2287, the British pound remained stable.