(Bloomberg) — U.S. stock futures headed lower after the S&P 500 closed at its 41st record this year. Government bonds and the dollar remained stable.
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Contracts on the S&P 500 pointed to a 0.3% decline for the underlying index, while Europe’s Stoxx 600 declined. SAP SE tumbled on news that the German software developer and other companies are being investigated by U.S. officials for possible conspiracy to overcharge government agencies over the course of a decade.
Traders are looking for new catalysts after last week’s half-point Federal Reserve rate cut boosted risk appetite. The latest policy moves from China on Wednesday do not extend beyond Asian markets, as investors question whether the moves will be enough to support the country’s weak economy.
Central banks are in the spotlight in Europe, with Sweden’s Riksbank cutting funding costs and hinting at further cuts in the coming months. A policy decision is also in the pipeline in the Czech Republic. Traders on Tuesday began pricing in an October cut by the European Central Bank and could be heartened by comments from Governing Council member Klaas Knot that he expects a gradual easing “in the near future.”
Gains for Nvidia Corp took U.S. stocks to their latest record high on Tuesday, but the biggest drop since August 2021 in the Conference Board’s consumer sentiment had previously weighed on markets. The report also flagged concerns about a slowdown in the labor market, while manufacturing figures were also weaker than expected.
“The decline in the perception of available jobs was striking,” said Carl Weinberg, chief economist at High Frequency Economics. “It will also send a warning message about the state of the economy to the financial markets.”
Swaps traders increased their bets to more than three-quarters of a point on Fed policy easing by year’s end, suggesting at least one more major U.S. cut is in store after the data. Investors are awaiting comments from Fed Chairman Jerome Powell on Thursday and data on the Fed’s benchmark rate measure on Friday for further clues on the size of future cuts.
China rally
China’s central bank on Wednesday cut the interest rate on its one-year policy loans by the highest level ever, the latest measure after the extensive stimulus package announced the day before.
A Bloomberg index of commodities rose for an 11th day, marking the longest winning streak since January 2018. Iron ore rose and gold reached another record.
The policy stimulus came after Chinese stocks hit a five-year low as the government’s incremental stimulus approach failed to resolve a crisis of confidence, with deflationary pressures, anemic consumption and a prolonged slump in the real estate sector dashing hopes for eroding an economic crisis in the short term. recovery.
Main events this week:
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ECB President Christine Lagarde speaks on Thursday
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US unemployment claims, durable goods, revised GDP, Thursday
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Fed Chairman Jerome Powell delivers pre-recorded remarks Thursday at the 10th annual US Treasury Market Conference
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Industrial gains in China, Friday
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Consumer confidence in the eurozone, Friday
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U.S. PCE, University of Michigan Consumer Confidence, Friday
Some of the major moves in the markets:
Stocks
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The Stoxx Europe 600 was down 0.2% as of 8:51 a.m. London time
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S&P 500 futures fell 0.2%
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Nasdaq 100 futures fell 0.3%
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Futures on the Dow Jones Industrial Average fell 0.2%
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The MSCI Asia Pacific Index was little changed
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The MSCI Emerging Markets Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1189
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The Japanese yen fell 0.4% to 143.86 per dollar
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The offshore yuan fell 0.2% to 7.0224 per dollar
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The British pound fell 0.2% to $1.3386
Cryptocurrencies
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Bitcoin fell 0.7% to $63,800.46
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Ether fell 1.1% to $2,622.75
Bonds
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The yield on 10-year government bonds was little changed at 3.74%
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The German ten-year yield remained little changed at 2.15%
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The British ten-year yield remained little changed at 3.93%
Raw materials
This story was produced with the help of Bloomberg Automation.
–With help from Richard Henderson, Zhu Lin, and Winnie Hsu.
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