(Bloomberg) – US index futures drifted lower and European stocks dropped as investors weighed some of the season’s biggest corporate earnings and the possibility of a Federal Reserve rate cut this week. Treasuries edged higher and most euro-area bonds rose.
Contracts on the S&P 500 nudged down a day after the US equity benchmark hit a record, and even as drug giants Pfizer Inc. and Merck & Co. beat earnings estimates. The Stoxx Europe 600 Index slipped after six straight sessions of gains, with energy producers among the biggest laggards. BP Plc shares declined as the driller said it’s unlikely to raise its dividend this year.
Yields on Japanese 10 – year bonds hit the highest since June and their Australian counterparts jumped almost nine basis points, while peers in the US and Germany halted a surge that’s lasted several days. The pound erased a decline after the UK’s main opposition party said it will back an early election.
Investors are struggling to find fresh impetus to extend the record- breaking rally in US stocks. Optimism on the China trade front from President Donald Trump is aiding the bull case, and an anticipated Fed rate cut on Wednesday may add further fuel. Still, recent data has come in mixed and while corporate earnings are topping estimates on average, the bar has been set low.
“What we’ve had happening in markets in the last few weeks is a lifting of that perceived uncertainty ”about US-China trade and Brexit, with central bank easing providing a lift, Sue Trinh, a global macro strategist at Manulife Investment Management, told Bloomberg TV. “The real risk is that we’re seeing a boost to asset prices but no real uptick in the real economy,” she said.
In Asia, Japan’s Topix benchmark closed at a 2019 high, while equities dropped in Hong Kong and Shanghai, where a warning against speculation on blockchain-related stocks depressed trading .
Elsewhere, spot palladium slipped after a record close Monday.
Here are some key events coming up this week:
Earnings include: Airbus, Apple, Credit Suisse, Facebook and PetroChina on Wednesday; Mitsubishi Heavy on Thursday; Exxon Mobil and Macquarie Group on Friday.The Fed is expected to lower the main interest rate when policy makers decide on Wednesday.U.S. economic growth is forecast to have slowed to 1.6% in the third quarter. GDP data are due Wednesday. The Fed’s preferred inflation metric, the core PCE deflator, is due Thursday.The Bank of Japan sets policy on Thursday and Governor Haruhiko Kuroda will hold a news conference.Friday brings the monthly U.S. non-farm payrolls report.
These are some of the main moves in markets:
Futures on the S&P 500 Index fell 0.1% as of 7: 16 am New York time.The Stoxx Europe 600 Index sank 0.4% .Japan’s Topix index climbed 0.9% .India’s Sensex Index surged 1.5%.
The Bloomberg Dollar Spot Index gained 0.1%. Britain’s pound strengthened 0.2% to 86. 135 pence per euro.The euro fell 0.2% to $ 1. 1079 .The South Korean Won appreciated 0.6% to 1, 163. 19 per dollar.
The yield on 10 – year Treasuries fell one basis point to 1. 83%. Britain’s 10 – year yield declined less than one basis point to 0. 719%. Germany’s 10 – year yield decreased two basis points to – 0. 35%. 10 -year yield jumped nine basis points to 1. 1855%.
The Bloomberg Commodity Index declined 0.2% .Gold fell 0.3% to $ 1, 487. 40 an ounce.West Texas Intermediate crude decreased 1.3% to $ 55. 08 a barrel.
– With assistance from Andreea Papuc, Tian Chen and Livia Yap.
To contact the reporter on this story: Todd White in Madrid at firstname.lastname@example.org
To contact the editors responsible for this story: Christopher Anstey at email@example.com,; Samuel Potter at spotter 33 @ bloomberg.net, Yakob Peterseil
For more articles like this, please visit us atbloomberg.com
© 2019 Bloomberg LP