European Futures Rise Ahead of Key US Indicators: Markets Wrap

(Bloomberg) — European stock futures rose as traders eyed U.S. inflation data this week and the Federal Reserve's monetary policy decision.

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Futures on the Euro Stoxx 50 rose 0.2% even as most Asian stocks fell. Treasuries crept higher in Asia, while the Bloomberg dollar gauge advanced for a fourth day.

European stocks fell on Monday after French President Emmanuel Macron called for a legislative vote following a crushing defeat in the European Parliament elections. Investors will be watching UK employment data on Tuesday which could influence the Bank of England's policy decision next week.

Chinese stocks led losses in Asia on concerns about property sector weakness and uncertain growth prospects, with benchmark indexes in mainland China and Hong Kong heading to their lowest closing levels since April. Shares linked to electric vehicle makers fell ahead of the European Commission's decision to impose temporary tariffs expected this week, while tourism-related companies fell amid disappointing travel demand during the recent Dragon Boat Festival holiday.

“The Hang Seng Index remains weak, as market participants would like to see more evidence of a future recovery trend, but the incoming data has been more mixed than reassuring,” John Rong Yip, market strategist at IG Asia Pte, wrote in a note to clients. . . “All eyes will be on Chinese inflation data this week, as positive consumer price growth may be on the lookout to reflect some stabilization in domestic demand.”

Fed decision

Wall Street's most prominent trading desks, from JP Morgan Chase & Co. to Citigroup Inc., are urging investors to prepare for a potential stock market shakeup following the release of US consumer price data and the Federal Reserve's interest rate decision scheduled for Wednesday.

The Fed is widely expected to keep borrowing costs on hold, but there is less certainty about officials' expectations for interest rates. A 41% majority of economists expect policymakers to indicate two cuts in their “dot plot,” while a similar number expect forecasts to show only one or no reduction at all.

“The guessing game on interest rates continues,” said Chris Larkin of Morgan Stanley's E*Trade. “Even friendlier inflation numbers probably won't prompt the Fed to act before September.”

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Investors are also preparing for the Bank of Japan's policy decision on Friday. The Bank of Japan is expected to discuss reducing bond purchases at the meeting, with some economists expecting the central bank to also lay the groundwork for raising interest rates next month.

In commodities, oil posted its biggest gain since March ahead of an OPEC report that will provide a snapshot of market expectations. Gold fell as traders looked to the Federal Reserve's meeting this week for more clues on when it might shift to monetary easing. Copper fell to its lowest level in more than a month, while iron ore prices fell to its lowest level in two months.

Apple chipset

The S&P 500 rose 0.3% on Monday to close at a new record high, while Nvidia Corp began trading after a 10-for-1 stock split.

Apple has sunk even after unveiling new AI features. The company's suppliers also declined after Apple's latest artificial intelligence platform was deemed a disappointment. Billionaire Elon Musk said he would ban Apple devices from his companies if OpenAI's artificial intelligence software was integrated at the operating system level, calling the association a security risk.

More than 60% of respondents in the latest MLIV Pulse survey expect US stocks to outperform Treasuries on a volatility-adjusted basis next month. This reading was only three times higher in the survey's history, which dates back to August 2022.

In corporate news, developer Dexin China Holdings has obtained a liquidation order from a Hong Kong court, adding to a growing number of legal victories for creditors related to overdue debts.

The most prominent features of the company:

• Activist Elliott Investment Management has called for sweeping changes in Southwest Airlines' leadership to reverse what she sees as years of poor performance by one of America's largest airlines.

• Advanced Micro Devices Inc. was downgraded. from Morgan Stanley, which said investor expectations for the chipmaker's AI business “appear very high.”

• KKR & Co. will join and CrowdStrike Holdings Inc. and GoDaddy Inc. to the S&P 500 as part of its latest quarterly weight change.

• Noble, the world's largest offshore oil drilling contractor by market value, has agreed to buy smaller rival Diamond Offshore Drilling in a deal worth $1.6 billion.

Main events this week:

• China Producer Price Index, Consumer Price Index, Wednesday

• German Consumer Price Index, Wednesday

• US Consumer Price Index, Federal Interest Rate Decision, Wednesday

• G7 Leaders Summit, June 13-15

• Industrial production in the eurozone, Thursday

• US Producer Price Index, Initial Jobless Claims, Thursday

• Tesla annual meeting, Thursday

• New York Fed President John Williams moderates a discussion with Treasury Secretary Janet Yellen on Thursday

• Bank of Japan monetary policy decision, Friday

• Chicago Fed President Austin Goolsbee speaks Friday

• Consumer confidence index from the University of Michigan, Friday

Some key movements in the markets:

Stores

• S&P 500 futures were down 0.1% as of 2:40 p.m. Tokyo time.

• Nasdaq 100 futures fell 0.1%

• There was little change in the Japanese Topix index

• Australia's S&P/ASX 200 index fell 1.5%.

• The Hang Seng Index in Hong Kong fell by 1.5%.

• The Shanghai Composite Index fell by 0.9%.

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• There was little change in the euro at $1.0768

• The Japanese yen fell 0.2% to 157.30 per dollar

• There was little change in the yuan in external transactions at 7.2669 to the dollar

Digital currencies

• Bitcoin fell 2.7% to $67,755.23

• Ethereum fell 3.1% to $3,558.61

Bonds

• The yield on the 10-year Treasury note fell 1 basis point to 4.46%.

• The yield on 10-year Japanese bonds was unchanged at 1.020%.

• The yield on Australian 10-year bonds rose by 11 basis points to 4.33%.

Goods

• There was little change in West Texas Intermediate crude

• Gold in spot transactions fell 0.5 percent to $2,298.54 per ounce

This story was produced with assistance from Bloomberg Automation.

–With assistance from Jenny Yu.

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