European Stocks Waver Before ECB as Miners Slump: Markets Wrap
(Bloomberg) — European stocks struggled to advance as another underwhelming stimulus announcement from China dragged miners lower, countering optimism over an expected interest-rate cut from the European Central Bank.
The Stoxx 600 index edged 0.2% higher, held back by weakness in basic resources. Rio Tinto Group and Glencore Plc dropped after a slump in iron ore prices, with China’s pledge to nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion) falling short of market expectations.
Nasdaq 100 futures climbed 0.5% after strong Taiwan Semiconductor Manufacturing Co. results assuaged investor concerns about the outlook for the semiconductor sector. In other earnings news, Nestle SA and Nokia Oyj fell after their results missed estimates.
The ECB is forecast to lower interest rates for a second straight meeting Thursday after data showed slowing inflation is being accompanied by a worsening economy. The deposit rate is expected to be decreased by another quarter-point to 3.25%.
Chris Jeffery, head of macro strategy at Legal & General Investment Management, doesn’t anticipate a big reaction in fixed income to the ECB decision, but is more skeptical this will be good news for equities.
“Financials will see their net interest margins squeezed by rate cuts, luxury goods providers are contending with an escalating tariff war with China, and automakers are struggling for global market share,” Jeffery wrote in a note.
Treasury 10-year yields climbed two basis points to 4.03%, while the Bloomberg dollar index was little changed.
Gold climbed to a record ahead of US data prints due later Thursday and as the increasingly tight presidential race drives demand for haven assets. Attention is on US retail sales and jobless figures for further clues on the pace of Federal Reserve easing this year.
Oil steadied, after four days of declines, as traders weighed potential risks to production in the Middle East, and as China’s latest economic briefing failed to spur expectations of increased demand.
In China, the main CSI 300 stock index erased a rise of as much as 1.3%, reflecting the increasingly high bar investors have set for optimism over the government’s stimulus efforts.
Iron ore tumbled to a three-week low following China’s latest moves to shore up the property market, underscoring skepticism they will be enough to boost construction activity and steel demand.
Key events this week:
- ECB rate decision, Thursday
- US retail sales, jobless claims, industrial production, Thursday
- Fed’s Austan Goolsbee speaks, Thursday
- China GDP, Friday
- US housing starts, Friday
- Fed’s Christopher Waller, Neel Kashkari speak, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 8:35 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.5%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.3%
- The MSCI Emerging Markets Index fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0857
- The Japanese yen was little changed at 149.75 per dollar
- The offshore yuan was little changed at 7.1425 per dollar
- The British pound was little changed at $1.2987
Cryptocurrencies
- Bitcoin fell 0.6% to $67,183.02
- Ether rose 0.2% to $2,624
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.04%
- Germany’s 10-year yield advanced three basis points to 2.21%
- Britain’s 10-year yield advanced three basis points to 4.09%
Commodities
- Brent crude fell 0.2% to $74.06 a barrel
- Spot gold rose 0.3% to $2,681.22 an ounce
This story was produced with the assistance of Bloomberg Automation.
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