(Bloomberg) — Wall Street equity futures edged lower as traders awaited the another set of data readings on the strength of the economy and looked for clues on the outlook for rate hikes. The tone was less upbeat than in Europe, where positive earnings news buoyed stocks.
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Contracts for the S&P 500 and Nasdaq 100 were down as much as 0.3%, after the two benchmarks advanced on Wednesday. Shopify Inc. dropped as much as 9.7% in premarket trading after the cloud-based commerce platform’s first-quarter revenue forecast was weaker than expected. Cisco Systems Inc. gained after the communications equipment company raised its full-year outlook.
Europe’s Stoxx 600 Index hit the highest level in a year. Standard Chartered Plc rose as the emerging-markets focused lender announced a buyback and forecast higher returns. British Gas owner Centrica Plc rallied after its record profit.
The greenback fell against all G-10 currencies while the yen strengthened. Treasuries rose, with the benchmark 10-year yield slipping after increasing by six basis points on Wednesday.
Stock investors have been encouraged by upbeat earnings reports and evidence of resilience in the economy combined with signs that inflation, even if it remains too high, is at least receding. After US retail sales in January jumped by the most in almost two years and homebuilder sentiment rose in February, jobless claims and producer inflation figures due later Thursday will provide more data for Federal Reserve policymakers.
“Once again, equity markets are managing to pick and choose strands of data and narrative which support the predilection for bullishness,” said James Athey, investment director at Abrdn.
UBS Global Wealth Management strategists said that although they expect an inflection point in monetary policy, inflation and market sentiment in 2023, it’s still too early to forecast a dovish pivot from the Fed. Chief Investment Officer Mark Haefele wrote in a note that “certain measures of inflation are moving in the wrong direction,” while a strong labor market is adding to concerns that wage growth will remain very high.
Investors are upping their bets on how far the Fed will raise rates this tightening cycle. They now see the federal funds rate climbing to 5.2% in July, according to trading in the US money markets. That compares with a perceived peak rate of 4.9% just two weeks ago, and the central bank’s current 4.5% to 4.75% target range.
US Rates May Be Heading Higher Than Wall Street or the Fed Think
Elsewhere in stocks Thursday, France’s CAC 40 index headed toward a record close for the first time in more than a year, powered by renewed strength in luxury names thanks to China’s reopening from Covid lockdowns as well as robust earnings. Pernod Ricard SA jumped after the French spirits company’s results comfortably beat expectations and it announced a buyback of its own.
A rally in risk assets has helped propel higher some of the most speculative corners of the market. A Goldman Sachs Group Inc. benchmark of unprofitable tech companies rose 4.4% and is up almost 30% this year.
Bitcoin rose further after jumping 8.7% Wednesday, the most in three months, edging closer to the $25,000 level and sparking gains in cryptocurrency-exposed stocks in New York premarket trading.
“Everybody is trying to figure out whether this is going to be a once-in-a-lifetime soft landing or if it’s just taking longer before we get a panic recession,” Jerry Braakman, chief investment officer of First American Trust, said in an interview. “That’s why you’re seeing a lot of divergence between bulls and bears.”
Oil remained within a recent narrow range as investors assessed more evidence of higher energy demand in China and a large build in US crude stockpiles. Gold was steady.
US jobless claims, Cleveland Fed President Loretta Mester speaks at Global Interdependence Center event Thursday
France CPI, Russia GDP Friday
Some of the main moves in markets:
S&P 500 futures fell 0.2% as of 7:18 a.m. New York time
Nasdaq 100 futures fell 0.3%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.4%
The MSCI World index rose 0.3%
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.2% to $1.0706
The British pound rose 0.2% to $1.2054
The Japanese yen rose 0.3% to 133.82 per dollar
Bitcoin rose 1.4% to $24,514.63
Ether rose 0.9% to $1,681.44
The yield on 10-year Treasuries declined two basis points to 3.79%
Germany’s 10-year yield was little changed at 2.48%
Britain’s 10-year yield was little changed at 3.49%
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sagarika Jaisinghani.
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