Stocks, futures fall with earnings, prices in focus: Markets Wrap

(Bloomberg) – European stocks and US stock futures fell after mixed corporate earnings and as investors studied the latest assessment of the US economy for clues as to where interest rates are headed.

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Cars led the falls in the Stoxx Europe 600 Index as Renault SA posted its sharpest decline in nearly five months, with concerns over pricing pressures outweighing the French automaker’s first-quarter sales decline. Germany’s DAX underperformed while other auto and parts makers fell. L’Oreal SA rose after the cosmetics maker reported strong demand. Contracts for the Nasdaq 100 fell more than 1%. A regional index of Asian equities fell.

The Federal Reserve’s monthly Beige Book survey, released on Wednesday, showed that the US economy is “frozen” and access to credit is limited. Federal Reserve Bank of New York President John Williams said the recent trend of slowing inflation is continuing, but the gains are too high. Dealer bets continue to lean toward a rate hike next month.

A gauge of dollar strength held steady while government bond yields fell.

“Inflation is not going to go away on its own,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets, in an interview with Bloomberg Television. “It’s really a question of whether the Fed has enough determination to crack the economy to bring inflation down, and right now it seems they still do.”

Elsewhere on the policy front, Klaas Knot, a member of the European Central Bank’s Governing Council, said the ECB may need to follow a widely expected rate hike next month by raising rates in June and July. “It’s too early to talk about a pause,” the Dutch central bank governor told the Irish Times newspaper in an interview published on Thursday. “For a pause I would really need a convincing reversal in underlying inflation dynamics.”

The story goes on

Investors also digested mixed gains from the US. Tesla Inc. missed earnings expectations while International Business Machines Corp. and Morgan Stanley beat forecasts.

In Asia, Taiwan Semiconductor Manufacturing Co. forecast worse-than-expected sales for the current quarter, reflecting a continued slump in demand for everything from smartphones to server chips. Apple Inc.’s main chipmaker warned that demand from the mobile and PC industries will remain “soft” for the time being.

Banks in China left interest rates unchanged after the People’s Bank of China remained unchanged. An independent review by the Reserve Bank of Australia recommended the establishment of a policy expert panel and fewer meetings followed by press conferences.

Elsewhere in the markets, Bitcoin fell below $29,000. Oil fell while gold was trending higher after a Wednesday slide pushed the precious metal below $2,000 an ounce.

The decline in US stock futures followed a flat day in New York trading. The CBOE VIX volatility index at its lowest since 2021. A Bank of America global measure of volatility that includes equities, interest rates, currencies and commodities is at its lowest since early 2022.

Important events this week:

• Eurozone Consumer Confidence, Thursday

• US Initial Jobless Claims, Existing Home Sales, Index of Leading Economic Indicators, Thursday

• ECB to publish report on March monetary policy meeting, Thursday

• The Fed’s Christopher Waller will speak at an event focused on cryptocurrencies on Thursday

• The Fed’s Patrick Harker speaks on “monetary policy and housing” on Thursday.

• The Fed’s Loretta Mester discusses the economic and policy outlook on Thursday

• The Fed’s Raphael Bostic discusses regional and national economic conditions on Thursday

• The Fed’s Michelle Bowman and Lorie Logan will speak at Thursday’s event

• Eurozone PMIs, Friday

• Japan CPI, Friday

• The Fed’s Lisa Cook discusses economic research at an event on Friday

Some of the key moves in the market:

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• The Stoxx Europe 600 was down 0.3% at 9:58 am London time

• S&P 500 futures fell 0.8%

• Nasdaq 100 futures fell 1.1%

• Futures on the Dow Jones Industrial Average fell 0.5%

• The MSCI Asia Pacific Index fell 0.1%

• The MSCI Emerging Markets Index fell 0.2%

currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.2% to $1.0975

• The Japanese yen was little changed at 134.61 per dollar

• The offshore yuan rose 0.1% to 6.8864 per dollar

• The British pound was little changed at $1.2446

cryptocurrencies

• Bitcoin fell 1.4% to $28,838.27

• Ether fell 1.5% to $1,950.63

Bind

• The 10-year government bond yield fell three basis points to 3.56%

• The 10-year German government bond yield fell three basis points to 2.48%

• The 10-year UK government bond yield fell 2 basis points to 3.84%

raw materials

• Brent crude fell 1.6% to $81.83 a barrel

• Spot gold rose 0.1% to $1,997.36 an ounce

This story was created with the support of Bloomberg Automation.

–Assisted by Richard Henderson.

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