(Bloomberg) — Stocks paused after last week’s strong rally as traders reassessed the outlook for corporate earnings ahead of key data from the US that may give further clues on the Federal Reserve’s policy path.
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The Stoxx Europe 600 index was flat following nine straight weeks of gains, the longest run in 12 years. Futures on the S&P 500 were little changed after Wall Street’s best weekly performance this year. Treasuries were steady and Bloomberg dollar spot index dipped.
The moves came ahead of a busy week of economic data that will include the Fed’s preferred inflation gauge due Friday, when many markets will be closed for a holiday. Global stocks need both earnings growth and central bank policy easing to defend current high valuations, according to JPMorgan Chase & Co. strategists led by Mislav Matejka.
“If activity momentum, and in particular earnings delivery, disappoint, and central banks end up more reactive than proactive, then we think that equity multiples would need to fall,” the strategy team wrote in a note.
Still, European stock valuations are not yet stretched, according to Goldman Sachs Group Inc. strategists who forecast the Stoxx Europe 600 could still rise about 6% over the next 12 months.
Among individual stock moves in Europe, Direct Line Insurance Group Plc plunged after Ageas said on Friday it won’t make a third takeover offer.
Stocks in Asia fell, led by Japanese equities following currency warnings by a top official. The yuan climbed amid signs of support from monetary authorities.
A regional equity gauge slipped for a second session, with Japan’s Topix index among the worst performers. This came after the nation’s top currency official warned against speculative moves in the foreign-exchange market. South Korea’s Kospi index also declined, while Australian shares inched higher.
The offshore yuan rose as the dollar weakened and China’s central bank set a stronger-than-expected daily reference rate. The gap between the yuan’s daily fixing versus estimates was the widest since November, while Bloomberg calculations indicated the People’s Bank of China injected a net 40 billion yuan ($5.56 billion) in open market operations.
Chinese Premier Li Qiang had earlier downplayed investor concerns of challenges facing the economy, saying Beijing was stepping up policy support to spur growth and systemic risks are being addressed. Chinese and Hong Kong stocks edged lower.
In commodities, oil gained on escalating geopolitical unrest following attacks in Russia, as well as positive commentary about the outlook for commodities. Gold was little changed, while iron ore held its largest weekly advance in six months.
Key events this week:
Bank of England policymaker Catherine Mann speaks, Monday
US new home sales, Monday
Fed’s Austan Goolsbee, Lisa Cook, Raphael Bostic speak, Monday
ECB chief economist Philip Lane appearance, Tuesday
US durable goods, Conference Board consumer confidence, Tuesday
Australia CPI, Wednesday
Bank of Japan board member Noaki Tamura speaks, Wednesday
China industrial profits, Wednesday
Bank of Communications, Agricultural Bank of China, China Merchants Bank report earnings, Wednesday
Eurozone economic, consumer confidence, Wednesday
Bank of England issues financial policy committee minutes, Wednesday
Fed’s Christopher Waller speaks, Wednesday
Germany unemployment, Thursday
UK GDP revision, Thursday
US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
Japan unemployment, Tokyo CPI, Friday
France CPI, Friday
US personal income and spending, wholesale inventories, Friday
Exchanges closed in US and many other countries in observance of Good Friday holiday, Friday
Fed’s Jerome Powell, Mary Daly speak, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 8:13 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.1%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.5%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.1% to $1.0821
The Japanese yen was little changed at 151.27 per dollar
The offshore yuan rose 0.4% to 7.2454 per dollar
The British pound was little changed at $1.2609
Cryptocurrencies
Bitcoin rose 1.4% to $67,097.88
Ether rose 1.3% to $3,457.95
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.21%
Germany’s 10-year yield was little changed at 2.32%
Britain’s 10-year yield was little changed at 3.92%
Commodities
Brent crude rose 0.5% to $85.82 a barrel
Spot gold rose 0.1% to $2,167.67 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar, Kit Rees and Julien Ponthus.
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