European stocks fall as traders weigh weak US data: markets close

(Bloomberg) — European shares fell as investors weighed concerns about the health of the U.S. economy against stronger expectations for an early easing of Federal Reserve policy.

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Energy stocks led a decline in Europe’s Stoxx 600 Index as crude oil prices continued losses on concerns about oversupply. BP Plc and TotalEnergies SE both fell by more than 2%. US stock futures fell lower. The dollar was flat while Treasuries stabilized after Monday’s rally, prompted by signs of a slowdown in the economy.

Asian shares struggled in a mixed session. The spotlight was on India, where the country’s stocks, currency and bonds all fell as the counting of the first votes marked a narrow victory for Prime Minister Narendra Modi-led Bharatiya Janata Party.

U.S. data on Monday showed factory activity shrank faster as production neared stagnation and orders fell by the most in almost two years. Later Tuesday, economists expect figures to show a third straight monthly decline in job openings, while Friday’s payroll figures will prove crucial in the search for clues about the prospects for the world’s largest economy and interest rates.

“An additional cooldown in job postings this week would also help send the message that the labor market is no longer a meaningful threat to near-term inflation dynamics,” said Oscar Munoz of TD Securities.

Swap contracts tied to upcoming Fed meetings continue to fully discount a quarter-point rate cut in December, with the probability of a September move rising to around 50% and November also offering high odds.

In Europe, strong economic data and vocal hawks from the European Central Bank are causing some analysts and investors to shake their expectations for rate cuts this year. While most economists still anticipate quarterly cuts after an initial move this week, some think persistent inflation, rapid wage growth and surprisingly robust output in the eurozone will limit easing.

According to strategists at Citigroup Inc. led by Beata Manthey, the region’s equities are still in line for a boost from interest rate cuts and improving corporate profit prospects. If interest rates settle at pre-global financial crisis levels – as expected by the bank’s economists – it would mean a longer-lasting tailwind for stocks, according to the Citi team.

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Back in Asia, Japan’s finance minister said the government’s intervention in the foreign exchange market just over a month ago was effective to some extent, in the first official acknowledgment of the move after the ministry released data showing it was a had spent record amounts to support the economy. yen. The yen fell as traders assessed the commentary.

Business highlights:

• GameStop Corp. grew when the Reddit account that fueled 2021’s meme stock mania posted a $116 million position in the video game retailer.

• Airbus SE is negotiating a major sale of A330neo aircraft to China, with talks gaining momentum since President Xi Jinping visited his French counterpart Emmanuel Macron last month.

• JetBlue Airways Corp.’s sales performance for this quarter will be slightly better than expected as the airline works to improve its operations and take advantage of “healthy overall demand trends.”

• Skydance Media plans to offer $23 per share to investors in Paramount Global’s voting stock as part of its plan to merge with the film and TV giant, people with knowledge of the matter said.

• Bill Ackman’s Pershing Square wants to raise $25 billion for a new closed-end fund aimed at US retail investors. This would more than double the fee-paying assets the company manages, according to people with direct knowledge of the plans.

• AP Moller-Maersk A/S, a bellwether for global trade, raised its full-year profit forecast, saying Red Sea congestion is having a bigger impact than previously expected on the world’s supply lines, which in turn will affect freight rates increases. .

Main events this week:

• US Factory Orders, JOLTS, Tuesday

• China Caixin serves PMI, Wednesday

• Eurozone S&P Global Services PMI, PPI, Wednesday

• Tariff decision Canada, Wednesday

• US ISM Services, Wednesday

• Eurozone retail sales, ECB interest rate decision, Thursday

• First US unemployment claims, trading, Thursday

• Chinese trading, currency reserves, Friday

• Eurozone GDP, Friday

• U.S. unemployment rate, nonfarm payrolls, Friday

Some of the major moves in the markets:

Shares

• The Stoxx Europe 600 was down 0.3% as of 8:14 a.m. London time

• S&P 500 futures fell 0.3%

• Nasdaq 100 futures fell 0.4%

• Futures on the Dow Jones Industrial Average fell 0.2%

• The MSCI Asia Pacific Index fell 1.1%

• The MSCI Emerging Markets Index fell 1.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.1% to $1.0893

• The Japanese yen rose 0.3% to 155.64 per dollar

• The offshore yuan was little changed at 7.2564 per dollar

• The British pound was little changed at $1.2796

Cryptocurrencies

• Bitcoin fell 0.1% to $69,026.57

• Ether was little changed at $3,770.15

Bonds

• The yield on 10-year government bonds was little changed at 4.39%

• The German ten-year yield fell by two basis points to 2.56%

• The British ten-year yield fell by two basis points to 4.20%

Raw materials

• Brent crude fell 1.1% to $77.51 per barrel

• Gold fell 0.3% to $2,343.83 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Alex Gabriel Simon, Shen Hong, and Liau Y-Sing.

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