(Bloomberg) — Global stocks retreated in a risk-off session as traders prepared for data that may offer insights about the health of the US economy and the Federal Reserve’s interest-rate path. The yen rallied while the dollar advanced.
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Futures contracts for the S&P 500 dropped 0.5% ahead of Wall Street’s reopening after the gauge closed within a whisker of its all-time high on Friday. Nvidia Corp. fell more than 2% in premarket trading as most members of the Magnificent Seven technology stocks lost ground.
In what is historically a poor month for stocks, traders are bracing for fresh bouts of volatility in the runup to the anticipated start of the Fed’s rate-easing cycle this month. Swap traders are currently pricing a roughly one-in-five chance of a 50 basis-point opening cut, according to data compiled by Bloomberg.
The publication of US manufacturing data later Tuesday will mark the start of a busy week of economic reports, culminating with nonfarm payrolls statistics on Friday. A similar series of releases in August induced fears that the US economy was heading for a hard landing, whiplashing markets.
“Markets need to be careful what they wish for to some extent,” Daniel Murray, deputy chief investment officer and global head of research at EFG Asset Management, said in an interview on Bloomberg Television. “If rates decline by a lot, and very quickly, then that would typically signify a very weak macro environment, and that usually isn’t very good for equity markets.”
The yen rallied 0.5% to around 146 against the dollar after Bank of Japan Governor Kazuo Ueda reiterated that the central bank will continue to raise interest rates if the economy and prices perform as expected.
Arif Husain, the head of fixed-income at T. Rowe Price who sounded the alarm on Japan’s rising interest rates last year, warned that there’s more market volatility ahead after the nation’s rate hike in July helped trigger a sharp reversal of the yen carry trade.
“BOJ monetary tightening and its impact on the flow of global capital is far from simple, and it will have a large influence over the next few years,” Husain said.
The dollar rose for a fifth day, its longest winning streak since mid-April. The yield on 10-year Treasuries advanced one basis point.
Europe’s Stoxx 600 dropped 0.4% as mining equities declined on the back of softer commodity prices, while a gauge of Asian stocks was flat.
Oil fell as Chinese demand concerns outweighed supply disruptions in Libya.
Corporate Highlights:
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United States Steel shares dropped 5.8% in premarket trading after Vice President Kamala Harris joined President Joe Biden in declaring the company should remain domestically owned and operated.
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Cathay Pacific Airways Ltd.’s inspection of its Airbus SE A350 fleet is focused on deformed or degraded fuel lines in the engines of the widebody aircraft.
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Illumina Inc.’s abandoned $7 billion bid for cancer-detection provider Grail Inc. should never have been probed by the European Union, according to a top court ruling.
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Grifols has postponed its capital markets day until further notice in light of Brookfield’s potential takeover offer, according to a letter to investors seen by Bloomberg.
Key events this week:
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US construction spending, ISM Manufacturing index, Tuesday
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Australia GDP, Wednesday
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China Caixin services PMI, Wednesday
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Euro-zone HCOB services PMI, PPI, Wednesday
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Fed’s Beige Book, Wednesday
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Eurozone retail sales, Thursday
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Germany factory orders, Thursday
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US initial jobless claims, ADP employment, ISM services index, Thursday
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Euro-zone GDP, Friday
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US nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.5% as of 8:19 a.m. New York time
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Nasdaq 100 futures fell 0.6%
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Futures on the Dow Jones Industrial Average fell 0.5%
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The Stoxx Europe 600 fell 0.4%
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The MSCI World Index was little changed
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $1.1037
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The British pound fell 0.2% to $1.3126
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The Japanese yen rose 0.5% to 146.15 per dollar
Cryptocurrencies
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Bitcoin rose 0.3% to $59,179.18
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Ether fell 1.8% to $2,510.06
Bonds
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The yield on 10-year Treasuries advanced one basis point to 3.91%
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Germany’s 10-year yield was little changed at 2.34%
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Britain’s 10-year yield declined one basis point to 4.04%
Commodities
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West Texas Intermediate crude fell 1.2% to $72.67 a barrel
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Spot gold fell 0.1% to $2,496.96 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joel Leon.
(An earlier version corrected the date that Chinese factory data came out.)
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