European stocks were steady and U.S. index futures edged higher as investors weighed earnings reports to assess the strength of the economic recovery. Shorter-term Treasury yields rose faster than longer-term ones.
The Stoxx Europe 600 Index fluctuated between modest gains and losses, with the energy sector underperforming as Royal Dutch Shell Plc slid more than 4% after missing analysts’ profit estimates. Better-than-estimated results for companies from Anheuser-Busch InBev NV to Nokia Oyj cushioned the impact of concerns over elevated inflation. The 10-year Treasury rate was flat, while the two-year yield added five basis points. Most European bonds gained.
Flatter sovereign-yield curves are highlighting growth worries as price pressures stoked by an energy crunch and supply-chain snarls push central banks toward paring accommodation. Investors will look to the European Central Bank later on Thursday for reassurance that surging prices are just transitory and not about to spiral out of control. Meanwhile, natural-gas and power prices in Europe fell after Russia signaled it may increase shipments of gas.
Global stocks are still near all-time peaks, supported by a robust corporate earnings season so far, with profit margins widening despite cost pressures. The risk is sentiment could weaken if investors lose confidence in the ability of policy makers to contain inflation while nurturing the economic rebound. The resilience of the Nasdaq 100 overnight and tumble in U.S. small-cap shares hinted at doubts about the so-called reopening trade.
There seems to be “less confidence that the Fed will be able to thread the needle and neither end up behind the curve with its taper timeline/gradual hikes nor ahead of the curve if it reacts too quickly,” Jonathan Cohn, head of rates trading strategy at Credit Suisse, wrote in a note.
In addition to the ECB policy meeting, investors are awaiting a report later Thursday on U.S. economic growth, which is likely to show a cooling recovery, as well as weekly jobs data. The Bank of Japan left its main policy settings unchanged.
Meanwhile, the White House is stepping up pressure on congressional Democrats to finalize a framework for President Joe Biden’s tax-and-spending plan of as much as $2 trillion. On the virus front, cases continue to escalate in a number of countries. Singapore said it’s investigating an “unusual surge” of infections.
Here are some events to watch this week:
- ECB rates decision, President Christine Lagarde briefing, Thursday
- U.S. GDP, initial jobless claims, Thursday
- G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday
Some of the main moves in markets:
- The Stoxx Europe 600 was little changed as of 9:29 a.m. London time
- Futures on the S&P 500 rose 0.1%
- Futures on the Nasdaq 100 rose 0.3%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.5%
- The MSCI Emerging Markets Index fell 0.4%
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1599
- The Japanese yen rose 0.2% to 113.59 per dollar
- The offshore yuan was little changed at 6.3965 per dollar
- The British pound was little changed at $1.3754
- The yield on 10-year Treasuries was little changed at 1.55%
- Germany’s 10-year yield advanced two basis points to -0.16%
- Britain’s 10-year yield advanced one basis point to 1.00%
- Brent crude fell 0.8% to $83.91 a barrel
- Spot gold rose 0.3% to $1,802.23 an ounce
© 2021 Bloomberg L.P.