Europe and US equity futures declined, along with most Asian shares, as investors awaited more reports in a busy week for earnings. China’s economic and geopolitical headwinds weighed on sentiment.
(Bloomberg) — Europe and US equity futures declined, along with most Asian shares, as investors awaited more reports in a busy week for earnings. China’s economic and geopolitical headwinds weighed on sentiment.
Euro Stoxx 50 futures fell and contracts on the S&P 500 and the Nasdaq 100 traded about 0.4% lower. The S&P 500 closed just 0.1% higher on Monday and the tech-heavy Nasdaq 100 slipped 0.2%. That extended to seven the number of trading days when the two indexes have both moved less than 1%.
UBS Group AG missed estimates for profit, according to its first-quarter results, but the bank attracted $28 billion from wealthy clients in the months running up to its takeover of Credit Suisse Group AG. Other heavyweights, including Microsoft Corp. and Alphabet Inc. will report results later Tuesday.
Shares in China and Hong Kong tumbled, with the Shanghai Shenzhen CSI 300 Index falling for a fifth day and the Hang Seng China Enterprises Index headed for its lowest close in five weeks. Traders cite geopolitical tensions such as the US plans last week to limit investments in key parts of China’s economy, while Chinese President Xi Jinping and other top leaders have highlighted risks the economy still faces.
A Bloomberg gauge of the dollar erased an earlier decline and Treasuries extended gains after 10-year yields slid eight basis points Monday, the biggest one-day decline since March.
Meanwhile, markets are now pricing in the peak for US interest rates in June, and then a decline to end the year below 4.5%.
The small shifts in Fed projections underscore the lack of direction at the start of a busy week for economic data and corporate earnings. Data published Monday showed US manufacturing data was weaker than economists forecast, while uncertainty over the debt ceiling persisted. Later this week, US GDP data is forecast to reveal slower growth, and the so-called core PCE deflator, the Fed’s preferred inflation gauge, is expected to show price growth cooled.
The CBOE VIX index of equity volatility remained near the 17-month low reached last week, but JPMorgan Chase & Co. strategist Marko Kolanovic said that may spell trouble for stock investors as it gives a false sense of calm.
Investors should remain stay defensive despite the current low volatility, according to Altaf Kassam, head of investment strategy & research EMEA at State Street Global Advisors. “Over the medium to long term, inverted yield curves, slowing consumer spending and tightening in credit standards will all take their toll,” he said on Bloomberg Television.
Back in China, some better-than-expected Chinese data in recent days hasn’t been enough to bolster investor sentiment in the equity market.
“People question the accuracy of the macro data, as bottom-up corporate earnings and guidance remain soft,” Bank of America Corp. strategists including Winnie Wu wrote in a research note. “We expect the debate on the bull/bear case to continue, and market may only get more clarity by June/July.”
Elsewhere, oil steadied and gold rose.
Key events this week:
- US new home sales, consumer confidence, Tuesday
- Australia CPI, Wednesday
- Sweden rate decision, Wednesday
- Eurozone economic, consumer confidence, Thursday
- US initial jobless claims, GDP, Thursday
- Bank of Japan meets on interest rates, Friday
- Euro-area GDP, Friday
- US personal income, Friday
Earnings highlights:
- Tuesday: Pepsi, General Motors, General Electric, McDonalds, Microsoft, UPS
- Wednesday: Boeing, Meta, Hilton
- Thursday: Amazon, American Airlines, Intel, Mastercard, Southwest Airlines, Hershey, Honeywell, Barclays
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.4% as of 6:30 a.m. London time. The S&P 500 rose 0.1%
- Nasdaq 100 futures fell 0.4%. The Nasdaq 100 fell 0.2%
- Euro Stoxx 50 futures fell 0.3%
- Japan’s Topix index rose 0.3%
- South Korea’s Kospi index fell 1.6%
- Hong Kong’s Hang Seng Index fell 1.9%
- China’s Shanghai Composite Index fell 1.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.1046
- The Japanese yen was little changed at 134.29 per dollar
- The offshore yuan fell 0.2% to 6.9190 per dollar
- The Australian dollar fell 0.3% to $0.6673
- The British pound was little changed at $1.2476
Cryptocurrencies
- Bitcoin fell 0.3% to $27,378.33
- Ether fell 0.7% to $1,826.19
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.47%
- Japan’s 10-year yield advanced one basis point to 0.475%
Commodities
- West Texas Intermediate crude fell 0.2% to $78.62 a barrel
- Spot gold rose 0.2% to $1,992.87 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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