(Bloomberg) European stocks struggled to find traction and bonds fell as traders weighed the outlook for monetary policy ahead of a slew of speeches by policymakers at the World Economic Forum in Davos this week.
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The Stoxx Europe 600 Index edged up 0.1%. Grifols rose more than 7% after the Spanish medical technology company sought to allay investor concerns over the completion of a 12.5 billion yuan ($1.7 billion) deal in China. Bond yields across the region rose, with Germany's 10-year bond yield rising by about 4 basis points.
Philip Lane, the European Central Bank's chief economist, poured cold water on hopes for rapid rate cuts, saying in an interview published over the weekend that easing policy too soon would be “self-defeating.” Traders are still betting on a 149 basis point rate cut this year (up from 153 basis points on Friday). ECB Executive Board member Robert Holzmann may add to this picture when he speaks in Davos later today.
Nasdaq 100 futures rose 0.2% and S&P 500 rose 0.1%. Dollar indicators were little changed. Treasury Cash Markers will be closed due to the U.S. holiday.
The MSCI Asia-Pacific stock index rose for a third straight hour after Friday's unexpected decline in U.S. producer prices, boosting expectations that the Federal Reserve will lower borrowing costs in coming months.
Japanese stocks rose last week as the TOPIX and Nikkei stock averages both rose to 34-year highs on the back of capital inflows from overseas investors. In Taiwan, stock prices also rose after the Democratic Progressive Party won the presidential election and the pro-China Nationalist Party won too few seats to control the parliament.
China's CSI300 rises after the People's Bank of China unexpectedly kept its one-year policy lending rate unchanged at 2.5% on Monday, amid speculation that officials will lower the required reserve ratio. The index fluctuated between rising and falling. This was contrary to expectations among economists that the so-called medium-term lending facility would be cut by 10 basis points.
“While rate cuts are likely still on the table, China appears to be taking a more cautious approach to policy easing,” said Marvin Chen, an analyst at Bloomberg Intelligence in Hong Kong.
Investors this week will be looking at further US earnings reports, as well as inflation trends in Germany and the UK, as well as a number of political leaders, including Chinese Premier Li Qiang, attending the annual World Economic Forum in Davos, Switzerland. The focus will be on individuals and government officials. Federal Reserve President Christopher Waller's speech after last week's attempt to dampen expectations of an impending rate cut will also be closely watched.
In commodities, oil was solid as soft fundamentals balanced out the risk that airstrikes by the US and its allies against the Houthis could escalate the conflict and disrupt the flow of oil from the Middle East.
Here are the main events on the market this week:
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The World Economic Forum opens in Davos on Monday with this year's theme: “Rebuilding Trust.”
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Eurozone industrial production, Monday
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Eurozone finance ministers meet in Brussels on Monday
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Germany releases 2023 growth rate on Monday, including fourth quarter forecast
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The Iowa Republican caucuses, the first nominating contest in the 2024 US presidential election, Monday.
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Japan PPI, Tuesday
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German CPI, ZEW survey forecast, Tuesday
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UK unemployment rate, Tuesday
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US Empire Manufacturing, Tuesday
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Goldman Sachs Group and Morgan Stanley will report earnings on Tuesday.
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Federal Reserve President Christopher Waller speaks on Tuesday
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China's GDP, real estate prices, retail sales, industrial production, Wednesday
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Eurozone CPI, Wednesday
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UK CPI, Wednesday
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US retail sales, industrial production, business inventories, Wednesday
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Fed releases Beige Book survey on Wednesday
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European Central Bank President Christine Lagarde speaks at Davos on Wednesday
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New York Fed President John Williams speaks on Wednesday
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Australian unemployment rate Thursday
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Japan's industrial production Thursday
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European Central Bank releases report of December policy meeting on Thursday
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U.S. housing starts, new unemployment insurance claims, Thursday
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Atlanta Fed President Rafael Bostic speaks Thursday
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Japan CPI, Friday
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U.S. existing home sales, University of Michigan consumer sentiment, Friday
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Congress faces deadline Friday to pass spending deal before partial federal government shutdown
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San Francisco Fed President Mary Daley speaks on Friday
The main movements in the market are:
stock
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As of 8:27 a.m. London time, the Stoxx European 600 was up 0.1%.
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S&P500 futures little changed
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Nasdaq 100 futures rose 0.3%
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Dow Jones Industrial Average futures little changed
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MSCI Asia Pacific Index rose 0.2%
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MSCI Emerging Markets Index little changed
currency
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Bloomberg Dollar Spot Index little changed
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The euro rose 0.1% to $1.0963.
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The Japanese yen fell 0.4% to 145.42 yen to the dollar.
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The offshore yuan was little changed at 7.1858 yuan to the dollar.
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The British pound was almost unchanged at $1.2758.
cryptocurrency
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Bitcoin rose 0.3% to $42,647.38
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Ether fell 0.6% to $2,510.45.
bond
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The 10-year government bond yield was almost unchanged at 3.94%.
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Germany's 10-year bond yield rose 3 basis points to 2.22%.
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The UK 10-year bond yield rose 2 basis points to 3.82%.
merchandise
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Brent crude oil remains largely unchanged
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Spot gold rose 0.4% to $2,056.47 an ounce.
This article was produced in partnership with Bloomberg Automation.
—With assistance from Zhu Lin and Michael Msika.
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