(Bloomberg) — US equity-index futures fell as investors took a pause from a rally driven by bets for less hawkish central banks, and sought more evidence that inflation is moderating.
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December contracts on the S&P 500 and Nasdaq 100 dropped 0.9% each after the underlying indexes scaled two-week highs on Tuesday. Treasuries slid across the curve and the dollar rose for the first time in three days. Twitter Inc. dropped in New York premarket trading, sliding further below Elon Musk’s offer price.
A growing cohort of money managers is cautioning that expectations for a so-called Federal Reserve pivot are overdone and risk ignoring the economic pain that would underpin such a dovish tilt should policymakers opt for it. With several Fed officials reiterating their focus on reducing inflation, US jobs numbers due Friday and a new earnings-reporting season may provide the next catalysts for markets.
“A dovish pivot requires more evidence of weaker growth and a decisive fall in inflation,” Emmanuel Cau, the head of European equity strategy at Barclays Plc, wrote in a note. “We doubt equities are out of the woods yet.”
Europe’s Stoxx 600 halted its best three-day advance since November 2020. The gauge fell 0.7%, trimming some of its 5.3% rally since Thursday. Real estate, auto-parts and retail shares slid the most.
In early New York trading, Twitter slipped 0.5% to $51.71, compared with Musk’s offer price of $54.20. The move came after the billionaire revived the troubled acquisition plan at the original price, thus seeking to avoid a protracted legal battle. Tesla Inc. dropped 1.2%.
Earlier, equity markets gained ground across Asia, catching up with overnight moves in the US. Hong Kong stocks posted their best rally since March after a one-day break.
US Treasuries fell across the curve on Wednesday, with the 10-year yield adding 7 basis points. The dollar was 0.5% higher, having fallen more than 1% on Tuesday.
West Texas Intermediate oil futures posted a modest loss, still holding above $86 per barrel. The OPEC+ grouping is considering an output cut of as much as 2 million barrels a day, delegates said before the group meets in Vienna.
Meanwhile, investors’ attention remained focused on Friday’s nonfarm payrolls data, which is expected to show 263,000 jobs were added in September.
“For the market to continue higher, the jobs data will have to be in line with, or short of expectations,” said Lindsey Bell, chief markets and money strategist at Ally.
Key events this week:
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Eurozone services PMIs, Wednesday
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OPEC+ meeting begins, Wednesday
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Fed’s Raphael Bostic speaks, Wednesday
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The Reserve Bank of New Zealand meets, Wednesday
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Eurozone retail sales, Thursday
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US initial jobless claims, Thursday
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Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
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US unemployment, wholesale inventories, nonfarm payrolls, Friday
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BOE Deputy Governor Dave Ramsden speaks at event, Friday
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Fed’s John Williams speaks at event, Friday
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Some of the main moves in markets:
Stocks
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Futures on the S&P 500 fell 0.9% as of 6:23 a.m. New York time
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Futures on the Nasdaq 100 fell 0.9%
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Futures on the Dow Jones Industrial Average fell 1%
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The Stoxx Europe 600 fell 0.9%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index rose 0.5%
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The euro fell 0.7% to $0.9919
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The British pound fell 0.8% to $1.1382
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The Japanese yen fell 0.2% to 144.42 per dollar
Cryptocurrencies
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Bitcoin fell 1.2% to $20,105.28
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Ether fell 1.2% to $1,345.48
Bonds
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The yield on 10-year Treasuries advanced seven basis points to 3.70%
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Germany’s 10-year yield advanced seven basis points to 1.94%
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Britain’s 10-year yield advanced 11 basis points to 3.98%
Commodities
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West Texas Intermediate crude fell 0.5% to $86.11 a barrel
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Gold futures fell 1% to $1,712.40 an ounce
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