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European Stocks Rise as US Futures Signal Caution: Markets Wrap


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(Bloomberg) — US equity-index futures slipped, European stocks wavered and the dollar snapped a three-day losing streak as investors assessed whether a rally in risk assets may be overdone given the outlook for inflation and economic growth.

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The Stoxx Europe 600 index was little changed after posting its best first two weeks in a year on record as easing inflation pressures, China’s reopening and mild weather supported equities. Futures on the S&P 500 and Nasdaq 100 fell more than 0.5% after stocks on Wall Street closed at the strongest level in a month on Friday.

The Bloomberg Dollar Spot Index rebounded from a seven-month low. Bond yields across Europe climbed. There was no trading in Treasuries, with US financial markets closed for a holiday.

While inflation in the US appears to have peaked, aggressive policy tightening by the Federal Reserve and other central banks risks pushing the global economy into a recession that will hurt corporate profits. The World Bank last week added to the gloomy outlook, warning of “one of the sharpest slowdowns we have seen in the past five decades.”

“Fear of missing out currently represents a key driver for equities,” Credit Agricole CIB strategists led by Jean-François Paren wrote in a note. “The market is getting a bit ahead of itself right now.”

Earnings will be a key catalyst moving forward as traders assess whether companies were able to navigate headwinds including higher interest rates. The busy week will also be punctuated by corporate earnings, including Wall Street heavyweights Goldman Sachs Group Inc. and Morgan Stanley.

A host of Fed officials will be speaking this week, providing more clues for investors. The World Economic Forum’s annual meeting kicks off in Davos, Switzerland, with speakers there including European Central Bank President Christine Lagarde and the International Monetary Fund’s Kristalina Georgieva.

Meanwhile, Japanese markets continued to be driven by speculation of a shift in monetary policy, with the Topix index trading lower as the yen’s rebound weighed on exporters.

Investors are on guard for another surprise from the Bank of Japan when it sets policy on Wednesday. The yen strengthened to levels last seen in May and Japan’s benchmark 10-year bond yield pushed above the top of the BOJ’s ceiling for a second day.

Bitcoin traded above $21,000 following a rebound over the weekend, when it surged amid optimism that it may have bottomed.

Elsewhere in markets, iron ore tumbled after China pledged to tighten supervision on pricing after the metal’s surge in recent months. Oil and gold slid.

Key events this week:

Earnings this week are scheduled to include: Charles Schwab, Discover Financial, Goldman Sachs, HDFC Bank, Interactive Brokers, Investor AB, Morgan Stanley, Netflix, Procter & Gamble, Prologis, State Street

World Economic Forum’s kicks off in Davos, Monday

US markets closed for Martin Luther King Jr. Day, Monday

China retail sales, industrial production, GDP, Tuesday

US Empire State manufacturing survey, Tuesday

Fed’s John Williams to speak, Tuesday

Eurozone CPI, Wednesday

US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment, Wednesday

Bank of Japan rate decision, Wednesday

Federal Reserve releases Beige Book, Wednesday

Fed speakers include Raphael Bostic, Lorie Logan and Patrick Harker, Wednesday

US housing starts, initial jobless claims, Philadelphia Fed index, Thursday

ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday

Fed speakers include Susan Collins and John Williams, Thursday

Japan CPI, Friday

China loan prime rates, Friday

US existing home sales, Friday

IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday

Some of the main moves in markets:


The Stoxx Europe 600 was little changed as of 9:09 a.m. London time

S&P 500 futures dropped 0.5%

Nasdaq 100 futures fell 0.7%

Futures on the Dow Jones Industrial Average fell 0.3%

The MSCI Asia Pacific Index fell 0.4%

The MSCI Emerging Markets Index was little changed


The Bloomberg Dollar Spot Index rose 0.4%

The euro fell 0.2% to $1.0803

The Japanese yen fell 0.7% to 128.77 per dollar

The offshore yuan fell 0.4% to 6.7396 per dollar

The British pound fell 0.4% to $1.2175


Bitcoin fell 0.7% to $20,763.95

Ether fell 0.9% to $1,539.25


Germany’s 10-year yield advanced five basis points to 2.22%

Britain’s 10-year yield advanced six basis points to 3.43%


Brent crude fell 0.9% to $84.50 a barrel

Spot gold fell 0.4% to $1,913.31 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson.

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©2023 Bloomberg L.P.


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