Stocks Churn as Traders Waver on US Rates Outlook: Markets Wrap

(Bloomberg) — European stocks retreated further from this week’s record levels as dialed-down bets for Federal Reserve policy easing prompted a pull-back from riskier assets.

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The Stoxx 600 fell 0.2%, weighed down by rates-sensitive sectors such as tech and real estate. US futures contracts were little changed after slipping back from all-time highs in the previous session. A gauge of the dollar edged higher and Treasuries held steady.

Luxury group Richemont rallied after naming Nicolas Bos as chief executive officer in a management shake-up. The meme-stock craze took another twist as GameStop Corp. and AMC Entertainment rebounded in early trade after shedding about $7 billion over two days. Reddit Inc. shares surged on a content partnership with OpenAI.

Friday’s general caution reflected a repricing of US rate cut expectations to only one reduction in 2024. Several Fed policymakers said the the central should keep borrowing costs higher for longer as they await more evidence that inflation is easing.

“The markets are now at a bit of a crossroads,” said Stuart Cole, head macro economist at Equiti Capital. “With the central banks all very much in a data-dependence mode, the markets will be also adjusting expectations to each piece of relevant data that comes out.”

Investors will be tracking comments from the Fed’s Christopher Waller, Neel Kashkari and Mary Daly due later Friday for further clues about the path for interest rates.

Elsewhere, European Central Bank Executive Board member Isabel Schnabel warned against back-to-back interest rate cuts in June and July. Swap traders continue to price in three ECB rate cuts this year, with a first reduction likely next month.

In Asia, equities declined on further signs of economic weakness in China. The yen retreated against the dollar after news the Bank of Japan left bond buying amounts unchanged.

Oil headed for a modest weekly gain as competing drivers for supply and demand were largely offset against each other. A record squeeze in the New York copper market eased.

Key events this week:

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.3% as of 10:23 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index fell 0.1%

• The MSCI Emerging Markets Index was little changed

Story continues

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.0843

• The Japanese yen fell 0.3% to 155.90 per dollar

• The offshore yuan fell 0.1% to 7.2329 per dollar

• The British pound fell 0.1% to $1.2651

Cryptocurrencies

• Bitcoin rose 1.3% to $66,156.66

• Ether rose 3% to $3,025.1

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.39%

• Germany’s 10-year yield advanced three basis points to 2.49%

• Britain’s 10-year yield advanced three basis points to 4.11%

Commodities

• Brent crude rose 0.1% to $83.36 a barrel

• Spot gold rose 0.3% to $2,383.98 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson.

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