(Bloomberg) — European stocks fell as traders weighed the economic threat of virus restrictions and awaited key U.S. inflation data.
Technology shares fell for a third day, leading declines in Europe’s Stoxx 600 Index. U.S. contracts rose after benchmarks ended a three-day rally. A Bloomberg gauge of Asian airlines dropped as much as 1.7% on Friday, the most in two weeks.
Investors are looking to U.S. consumer inflation numbers on Friday and meetings by central banks on both sides of the Atlantic next week for clues on the pace of tapering and interest rate increases. Meanwhile, the U.S. appears to be headed for a holiday crisis as virus cases and hospital admissions climb, while London firms started telling thousands of staff to work from home and Heathrow airport said passenger numbers may recover to barely half of pre-Covid levels next year.
The dollar gained after a report on Thursday showed applications for U.S. state unemployment benefits declined to the lowest level since 1969, though economists flagged difficulties in seasonal adjustments to arrive at that figure. Treasury yields and oil advanced.
“Various FOMC participants, including Chair Powell, have signaled a hawkish shift in their policy stance, catalyzed by increasing discomfort with elevated inflation against a backdrop of robust growth and ongoing strengthening in labor markets conditions,” Morgan Stanley economists and strategists including Ellen Zentner, wrote in a note Thursday. “We revise our Fed call and now expect the FOMC to begin raising rates in Sept. 2022 — two quarters earlier than our prior forecast.”
Among individual moves, Daimler AG’s trucks division gained in its first trading day as the storied German manufacturer completed a historic spinoff to better face sweeping changes in the auto industry. Polish retailer LPP rose to a record.
Tesla fell in premarket trading after Elon Musk offloaded more of his stake in the electric vehicle maker.
Separately, China Evergrande Group Chairman Hui Ka Yan was forced to sell pledged shares in the company, according to disclosures that came a day after the developer was officially labeled a defaulter for the first time. Chinese artificial intelligence firm SenseTime Group Inc. is delaying its Hong Kong initial public offering, according to people familiar with the matter, as tensions with the U.S. government ratcheted higher at the last minute.
China’s central bank took further steps to limit the yuan’s strength — setting the weakest reference rate relative to estimates compiled by Bloomberg since 2018 — a day after policy makers raised the foreign currency reserve requirement ratio for banks a second time this year. The yuan shrugged off the moves to advance further.
Bloomberg’s Markets Live team is running a survey on asset views for 2022. It’s anonymous, takes about 2 minutes, and the results will be shared in the latter part of December. To participate, click here.
Here are some key events to watch this week:
- U.S. CPI Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets as of 7:12 a.m. in London:
Stocks
- The Stoxx Europe 600 fell 0.4% as of 10:05 a.m. London time
- Futures on the S&P 500 rose 0.3%
- Futures on the Nasdaq 100 rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The MSCI Asia Pacific Index rose 0.3%
- The MSCI Emerging Markets Index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.1% to $1.1281
- The Japanese yen fell 0.2% to 113.68 per dollar
- The offshore yuan rose 0.1% to 6.3718 per dollar
- The British pound fell 0.2% to $1.3199
Bonds
- The yield on 10-year Treasuries advanced one basis point to 1.51%
- Germany’s 10-year yield advanced one basis point to -0.34%
- Britain’s 10-year yield advanced one basis point to 0.77%
Commodities
- Brent crude rose 0.3% to $74.66 a barrel
- Spot gold fell 0.3% to $1,770.87 an ounce
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