(Bloomberg) — European stocks fell on Friday, tracking declines in the U.S. and Asia, as traders retreated from expectations of the Federal Reserve's first interest rate cut.
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The Stoxx Europe 600 index fell 0.5%, heading for its first weekly decline in three weeks, with technology and financial stocks leading the declines. US stock futures rose by about 0.2%, after stronger-than-expected US business activity data led to the largest decline for the Standard & Poor's 500 index this month. The swap is now pricing the Fed to deliver its first rate cut in December, rather than November.
The change put the dollar on track for its biggest weekly gain since early April against a basket of its peers, while interest-rate-sensitive two-year Treasury yields traded near three-week highs hit on Thursday. Earlier in the week, minutes from the Fed's May meeting showed that policymakers were in no rush to cut interest rates, and some even saw the need for a more restrictive policy.
“The bigger picture is that the US economy is stronger than we would have expected at this point with the current level of interest rates,” said Anders Vergmann, portfolio manager at Bainbridge Investments. He said market sentiment will remain steady as long as Fed Chairman Jerome Powell “signals a rate cut and eliminates any thoughts of raising rates.”
Investors are unlikely to place large bets in either direction ahead of the long weekend in the US and UK, while there are also some concerns that the shift to a faster settlement cycle in the US could lead to some failed trades after Wall Street returns. From Monday off.
Among individual stock movers, DS Smith Plc fell as much as 4.2% in London amid uncertainty over International Paper Co.'s plan to… To acquire the British Packaging Company. In pre-market trading in New York, chip shares Micron Technology Inc. and Microchip Technology Inc. Gains, though Nvidia Corp fell after blockbuster quarterly results pushed it to new highs.
In commodities, oil held near its lowest level in more than three months, amid concerns about demand for the upcoming Memorial Day weekend which marks the start of the summer driving season in the United States.
Main events this week:
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Retail sales in Canada, Friday
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German GDP, Friday
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US Durable Goods, Consumer Confidence, Friday
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The Fed's Christopher Waller speaks on Friday
Some key market movements:
Stores
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The Stoxx Europe 600 Index was down 0.5% as of 9:29 AM London time
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S&P 500 futures rose 0.2%
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Nasdaq 100 futures rose 0.1%.
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Dow Jones Industrial Average futures were little changed
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MSCI Asia Pacific Stock Index fell 0.8%
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MSCI Emerging Markets Index fell 0.7%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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There was little change in the euro at $1.0821
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There was little change in the Japanese yen at 157.08 to the dollar
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There was little change in the yuan in external transactions at 7.2589 to the dollar
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There was little change in the pound sterling at $1.2698
Digital currencies
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Bitcoin fell 1.6% to $66,696.1
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Ethereum fell 3.1% to $3,639.07
Bonds
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The yield on 10-year Treasury bonds was little changed at 4.47%.
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The yield on 10-year German bonds fell by one basis point to 2.58%.
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There was little change in the yield on British 10-year bonds at 4.25%.
Goods
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Brent crude fell 0.2 percent to $81.20 a barrel
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Gold rose in spot transactions by 0.3% to $2,336.77 per ounce
This story was produced with assistance from Bloomberg Automation.
-With assistance from Winnie Hsu and Chiranjeevi Chakraborty.
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