European bonds gained and the euro plunged versus the dollar after a sharp decline in manufacturing and services gauges from the common-currency region fanned concerns about the faltering global economy.
Stocks were lackluster at the start of a week packed with major central bank policy decisions and corporate earnings, as investors fretted about the magnitude of further interest rate increases and their effect on economic growth. In the euro area, the private-sector economy contracted more than anticipated in July, highlighting the quandary for the European Central Bank as it prepares to raise interest rates later this week.
The data pressured the euro which fell to a two-week low against the dollar, while the yield on German 10-year bonds, the euro-area benchmark, slid as much as seven basis points. Europe’s Stoxx 600 equity gauge fluctuated, with Spanish equities underperforming after an inconclusive outcome in the election on Sunday.
Traders are positioning for the Fed and the ECB to raise interest rates this week and to signal whether more hikes are likely after record tightening campaigns.
“Market have entered a phase of anxious waiting with two factors coming into play, central banks and earnings,” said Jeanne Asseraf-Bitton, head of research and strategy at BFT IM. “I’m not sure there will be a lot of surprises coming from the central banks so it’s really earnings that will be key. Valuations are expensive so earnings need to hold, margins need to hold.”
Treasury yields edged lower, while U.S. stock-index futures posted modest gains after the S&P 500 closed flat on Friday and the Nasdaq 100 saw continued selling in technology companies following a disappointing batch of results.
Among individual movers in Europe, Philips plunged as much as 7.7% after reporting a drop in order intake. Ryanair Holdings fell after lowering its traffic prediction. Ocado Group gained more than 10% after the UK robotics company settled a contractual dispute, while Julius Baer Group gained after reporting better-than-expected inflows.
In the U.S., Mattel Inc. rose as much as much as 2.5% in premarket trading Monday after "Barbie," a comedy about the company’s famous fashion doll, became the top-grossing picture in U.S. and Canadian cinemas, taking in $155 million in ticket sales. Warner Bros. Discovery Inc., the parent of the Hollywood studio that produced the move, also advanced.
U.S. heavyweights including Alphabet Inc., Exxon Mobil Corp. and Meta Platforms Inc. are all due to report, while in Asia investors will be watching names including Samsung Electronics Co., Rio Tinto Ltd. and Hitachi Ltd.
The flash Purchasing Managers’ Index for the euro region stayed below the 50 threshold that indicates growth for a second month, dropping to 48.9 in July from 49.9 a month earlier. That’s the lowest reading since November and worse than predicted by any economist in a Bloomberg survey.
The data follows last week’s downbeat readings on the Chinese economy, with local stocks lagging as investors waited to see if Beijing will meet pledges to boost consumption and support businesses.
Most other Asian stock gauges advanced on Monday, with Japan’s market boosted by a report late Friday that Bank of Japan officials see little urgent need to address the side effects of their ultra-loose monetary policy. The Bank of Japan is expected to stick to ultra-loose policy settings at its Friday meeting.
In commodities, oil edged down after notching its fourth weekly gain amid tentative signs that global markets are tightening.
Key events this week:
Some of the main moves in markets:
This story was produced with the assistance of Bloomberg Automation.
Commonwealth Financial joins a number of firm that have recently cut jobs.
A slow drip of disclosures, an executive exit, and a stock that fell hard before the suit landed
New research finds unpaid caregivers are more likely to struggle with debt, lower savings and diminished retirement confidence than non-caregivers.
Large broker-dealers and registered investment advisors have, since 2020, been developing or sticking to strategies and tactics to combat the pain of intense, short-term market volatility
Centaurus Financial touts its independence as a key selling point at a time when many firms are being swallowed up.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
