Stocks Fall Before US Inflation Data, Dollar Dips: Markets Wrap

(Bloomberg) — European stocks extended losses as investors braced for US inflation data that may help decide the course of the Federal Reserve’s tightening path.

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The Stoxx Europe 600 Index fell more than 1%, with real estate and financial services sectors underperforming. US futures wavered after the S&P 500 shed 2.4% Thursday.

Short-dated US Treasury yields hovered near 2022 peaks following a selloff in euro-area bonds after the European Central Bank opened the door to a half-point interest-rate hike later in the year. Investors will be closely watching the US inflation reading, which is expected to show annual consumer-price gains of more than 8%.

“There’s a bit more chatter, call it whisper numbers, for the CPI being a little north of expectations,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., said on Bloomberg Television.

The dollar slipped from a three-week high and the yen snapped a slide.

In commodities, oil edged lower in part on concerns about demand as Shanghai prepares to lock down seven districts this weekend to conduct Covid testing. Chinese President Xi Jinping called on his government to adhere “unwaveringly” to its Covid Zero policy, while at the same time striking a balance with the needs of the economy.

Asia’s stock market was on the back foot Friday but off session lows as investors assessed China’s outlook and girded for US inflation data. Chinese tech shares including Alibaba Group Holding Ltd. reversed an early-session swoon, helping the region’s equity index to keep losses below 1%.

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Key events to watch this week:

US CPI, University of Michigan consumer sentiment Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 1.3% as of 8:28 a.m. London time
Futures on the S&P 500 fell 0.2%
Futures on the Nasdaq 100 were little changed
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 0.9%
The MSCI Emerging Markets Index fell 0.8%

Currencies

The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.2% to $1.0638
The Japanese yen rose 0.6% to 133.50 per dollar
The offshore yuan rose 0.2% to 6.6860 per dollar
The British pound was unchanged at $1.2493

Bonds

The yield on 10-year Treasuries declined one basis point to 3.03%
Germany’s 10-year yield was little changed at 1.43%
Britain’s 10-year yield was little changed at 2.32%

Commodities

Brent crude fell 0.7% to $122.19 a barrel
Spot gold was little changed