(Bloomberg) — Risk sentiment that boosted Asian markets weakened in European hours as investors weighed China’s better-than-forecast trade data against the threat of a reduction in central-bank support.
Nasdaq 100 Index futures rose, while contracts on Russell 2000 Index fell, as the U.S. markets reopened after the Labor Day holiday. Equity gains in China and Japan were followed by losses in Europe as investors speculated euro-zone policy makers may get ready to roll back stimulus. Vertex Pharmaceuticals fell in premarket trading after Morgan Stanley downgraded the stock.
Chinese exports and imports both grew faster than estimated in August, allaying concerns the pandemic is delaying economic reopening and creating supply-chain bottlenecks. A weak U.S. jobs report also bolstered bets the Federal Reserve will delay its stimulus tapering. Yet, investors remain edgy over the prospects for a growth slowdown and tapering of support outside the U.S., especially in Europe.
“There is a growing expectation that the European Central Bank could start talking about tapering its bond purchases sooner rather than later,” Ipek Ozkardeskaya, a senior analyst at Swissquote Group Holdings, wrote in a note. “The ECB hawks who have been in a retreat for the past year won’t stay quiet for longer facing the rising inflation threat.”
Policy-tightening expectations gathered pace in Europe and Asia. The Stoxx 600 gauge fell as investors focused on the ECB’s Thursday meeting where the central bank will decide if it will dial down emergency stimulus. Bank of America said it sees the “Goldilocks combination” of accelerating growth and lower real yields coming to an end. In Australia, the central bank stuck with a planned reduction in bond purchases, even though a majority of analysts had expected the central bank to hold off the tapering.
Treasury yields and the dollar rose. The 10-year rate added 4 basis points. Earlier, Japan’s Nikkei 225 hit 30,000 for the first time since April, boosted by an index reshuffle and optimism that a new prime minister will usher in favorable policies. MSCI Inc.’s gauge for global stocks rose for an eighth day.
Bitcoin erased gains after trading at the highest level in almost four months. El Salvador bought 400 coins as it moved to adopt the cryptocurrency as legal tender.
Vertex Pharmaceuticals fell 2.2% in early New York trading after Morgan Stanley cut its stock recommendation to underweight. Moderna Inc. also declined even though its price target was raised.
What to watch this week:
U.S. President Joe Biden will likely make his choice this week on whether to renominate Fed Chair Jerome Powell to a second termEl Salvador’s Bitcoin law takes effect, making the virtual currency legal tender, TuesdayDallas Fed President Robert Kaplan holds a virtual town hall discussion WednesdayECB President Christine Lagarde holds a press conference after the bank’s rate decision ThursdayChina PPI, CPI, new yuan loans, money supply, aggregate financing, Thursday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
The Stoxx Europe 600 fell 0.1% as of 9:41 a.m. London timeFutures on the S&P 500 were little changedFutures on the Nasdaq 100 rose 0.2%Futures on the Dow Jones Industrial Average were little changedThe MSCI Asia Pacific Index rose 0.3%The MSCI Emerging Markets Index was little changed
The Bloomberg Dollar Spot Index rose 0.1%The euro was little changed at $1.1868The Japanese yen fell 0.1% to 109.98 per dollarThe offshore yuan fell 0.1% to 6.4571 per dollarThe British pound fell 0.2% to $1.3815
The yield on 10-year Treasuries advanced four basis points to 1.36%Germany’s 10-year yield advanced three basis points to -0.34%Britain’s 10-year yield advanced three basis points to 0.72%
Brent crude rose 0.3% to $72.43 a barrelSpot gold fell 0.5% to $1,814.77 an ounce