The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, November 4, 2021. REUTERS/Staff
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The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, November 4, 2021. REUTERS/Staff
Strong points:
- European stocks fall
- Slightly higher US futures
- The dollar continues to retreat after its two-decade high
- Euro up 0.7% after Reuters report
- Steady-state oil
European stocks slid on Tuesday as the dollar hovered below last week’s high, with investors eyeing central bank meetings this week for clues on the direction of the market.
The broader Euro STOXX 600 fell 0.6%, with indices in Paris and Frankfurt both down 0.9%.
Traders were on edge with little immediate macroeconomic or political news to guide direction, market participants said.
“Right now it’s conservative mode. It’s not necessarily just defense and really short markets,” said Olivier Marciot, senior portfolio manager at Unigestion.
“Really few exposures anywhere, and waiting for some sort of clearer direction to deploy the risk.”
The MSCI World Equity Index, which tracks stocks from 50 countries, fell 0.1%.
Wall Street futures gauges pointed to slim gains. U.S. stock markets had closed lower overnight, impacted by reports from Apple planning to slow growth in hiring and spending next year.
The dollar continued its slow retreat from last week’s two-decade high, hovering just above a one-week low hit on Monday.
The dollar index – which measures the greenback against six peers – was down 0.3% at 107.100, well off last week’s high of 109.29, a level not seen since September 2002.
Eurozone government bond yields fell slightly as bond markets took comfort from a pullback in high gasoline prices, with German Bund yields falling 2.5 basis points to 1.19.
Earlier, MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.4%.
Market participants pointed to central bank meetings later in the week as likely drivers of market moves.
The European Central Bank and the Bank of Japan both meet on Thursday, with the ECB widely expected to start raising rates from their pandemic-era lows with a 25 basis point hike, while little change is expected. expected from the ultra accommodating BOJ.
The euro jumped 0.7% to $1.0223 after Reuters reported ECB policymakers would discuss whether to raise interest rates by 25 or 50 basis points at their meeting on Thursday. to bring record inflation under control.
BLURRED PICTURE
But as markets waited for major macro news, the bigger picture was murky.
“It’s kind of like ‘paint by numbers’ right now, you have a picture to fill in, but we don’t have all the colors yet,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
“A few things are missing (such as) the direction of the US labor market and unemployment rate, and if central banks will step back and say ‘this is the peak of inflation and we don’t have no need to be so belligerent’, or ‘we’re going to be really aggressive'”.
Markets expect a big 75 basis point interest rate hike at the US Federal Reserve meeting next week, far from flirting with the possibility of a whopping 100 basis point hike .
The euro, under pressure amid soaring energy costs, has recovered somewhat from its brief dip below a U.S. dollar last week for the first time since 2002.
Underlining the danger facing the euro, Russia’s Gazprom has told customers in Europe that it cannot guarantee gas supplies due to “extraordinary” circumstances, according to a letter seen by Reuters, raising concerns. bidding in an economic exchange with the West over Moscow. invasion of Ukraine.
Oil, which is also struggling to find a clear direction, edged higher gaining 5% overnight. Brent crude was flat at $105.84 a barrel, while US crude fell 0.2% to $102.576.
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