(Bloomberg) — European stocks followed Asian markets lower on Monday, while bonds steadied as investors recalibrated their bets in the wake of last week’s selloff. Boeing Co. tumbled in US premarket trading.
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The Stoxx 600 benchmark sank 0.3% as the Hang Seng China Enterprises Index had its lowest close since November 2022. Futures on the S&P 500 lost 0.2% with Boeing retreating 7.9% as more carriers grounded its 737 Max 9 aircraft. Brent crude slid below $78 after Saudi Arabia cut official selling prices for all regions amid persistent weakness in the market.
Markets are looking for direction after mixed US economic data on Friday capped a week that saw global equities sink the most since October on speculation the Federal Reserve was in no rush to reduce interest rates. The US inflation print due Thursday as well as the start of earnings season at the end of the week may offer investors further catalysts.
“Multiples are already priced at rich levels,” BNP Paribas analysts including Calvin Tse and Sam Lynton-Brown wrote in a note. “With the probability of a disappointment in full-year earnings elevated, we believe that downside risks outweigh upside ones.”
Read More: High-Flying Profit Forecasts Head Back Down to Earth: MLIV Pulse
According to Bloomberg’s latest Markets Live Pulse survey, the consensus estimate of sell-side analysts is that S&P 500 earnings this year will reach historic levels, but those forecasts are too high. The poll shows an economic slowdown is the biggest risk for the bottom lines this year.
In Europe, German factory orders rose much less than anticipated in November, a discouraging sign for Europe’s largest economy, data showed on Monday.
Seizing Yields
The yield on US Treasuries declined three basis points to 4.02%. Some traders are unfazed by the recent pullback, seeing it as a chance to seize on elevated yields before the Federal Reserve starts driving down rates.
The dynamic was on display Friday, when bond prices dipped after the Labor Department reported that job growth unexpectedly accelerated last month. But the selloff was curtailed because buyers swooped in as 10-year Treasury yields neared 4.1%, the highest since mid-December.
In Asia, the Hang Seng China Enterprises Index closed down 2.3%, led by a selloff in technology shares. Sentiment remains quite negative in China, Nomura Group analysts including Chetan Seth in Singapore wrote in a client note. “There have been more signs of support for the economy, but equity investors still do not appear convinced,” they said.
Elsewhere, Brent fell more than 1%, halting last week’s rally after the Saudi price cuts. The reductions underscored a worsening global outlook amid strong global supply, including from the US, and outweighed concern over Red Sea tensions and supply disruptions in Libya.
Key events this week:
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Eurozone economic confidence, retail sales, consumer confidence, Monday
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Atlanta Fed President Raphael Bostic speaks, Monday
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US House returns from recess, Monday
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Australia retail sales, Tuesday
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Japan Tokyo CPI, household spending, Tuesday
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Eurozone unemployment, Tuesday
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World Economic Forum’s global risks report released, Wednesday
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US wholesale inventories, Wednesday
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Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday
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New York Fed President John Williams speaks, Wednesday
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US CPI, initial jobless claims, Thursday
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China CPI, PPI, trade, Friday
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France CPI, Friday
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UK industrial production, Friday
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US PPI, Friday
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Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday
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Minneapolis Fed President Neel Kashkari speaks, Friday
Stocks
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The Stoxx Europe 600 fell 0.3% as of 10:04 a.m. London time
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S&P 500 futures fell 0.2%
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Nasdaq 100 futures fell 0.2%
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Futures on the Dow Jones Industrial Average fell 0.5%
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The MSCI Asia Pacific Index fell 0.6%
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The MSCI Emerging Markets Index fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0936
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The Japanese yen rose 0.2% to 144.30 per dollar
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The offshore yuan fell 0.1% to 7.1701 per dollar
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The British pound fell 0.2% to $1.2695
Cryptocurrencies
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Bitcoin fell 1.1% to $43,751.95
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Ether fell 1.3% to $2,212.74
Bonds
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The yield on 10-year Treasuries declined two basis points to 4.02%
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Germany’s 10-year yield was little changed at 2.16%
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Britain’s 10-year yield advanced two basis points to 3.80%
Commodities
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Brent crude fell 1.1% to $77.88 a barrel
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Spot gold fell 0.8% to $2,028.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Tassia Sipahutar and Alice Gledhill.
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