European stocks held in a narrow range on Monday, pausing after a rally that has seen stocks rise in five of the past six weeks.
After rising 1.2% last week, the Stoxx Europe 600 slipped 0.4%.
Nokia shares jumped 6.4%, catching a rally in its US-listed stock after Goldman Sachs raised its rating on the telecommunications equipment maker to buy from neutral.
Shares of British luxury goods group Burberry fell 7% after Marco Gobbetti announced he would leave the company at the end of the year to take on the same role at leather goods maker Salvatore Ferragamo in his Italy. native. Burberry said it has started looking for its successor.
UK bakery Greggs was up 3% early in the session before losing some of those gains, after saying the rebound in sales since its May 10 update was stronger than expected.
Equity futures wobbled on Monday, suggesting major indices are approaching record highs after the S&P 500 posted its strongest weekly advance since February.
Broad gauge futures contracts, which closed their 31st all-time high on Friday, drifted between moderate gains and losses.
Stocks have been rising since mid-May, boosted by a robust economic recovery, the prospect of further fiscal stimulus and low bond yields that have prompted investors to buy stocks. However, some investors are concerned that the market will have a difficult time due to signs of spike in growth and the nervous outlook for inflation and monetary policy.
“This recovery still has a long way to go and there is still strong growth,” said Frank Øland, chief strategist at Danske Bank. “But of course you’ve probably passed peak growth in the US, so the data will start to look less impressive, and that might be a concern.”
Danske has reduced its holdings of US stocks and bought more stocks in Europe, where Øland said the economic recovery is still gaining momentum.
Investors said financial markets are likely to be calm this week ahead of Friday’s jobs report. This should show that the economy created 683,000 jobs in June. Fund managers will also analyze Eurozone consumer price data on Wednesday to determine if inflation takes off globally.
Equities will continue to perform well if money managers remain confident that the inflation surge will subside, keeping bond yields relatively low, said Edward Park, chief investment officer at Brooks Macdonald. “Investors who deploy capital will have the option of losing money in the bond market after inflation, losing it in cash, or putting it in risky assets.”
The dollar is expected to continue reversing its initial gains this week after the Federal Reserve’s latest policy meeting, unless the June report on the non-farm payroll in the United States exceeds expectations, MUFG Bank said. .
Earlier this month, the Fed advanced its expectations for the first post-pandemic interest rate hike. However, comments from Fed Chairman Jerome Powell and New York Fed Chairman John Williams last week “helped allay fears of an even more abrupt shift to a stricter policy of the Fed, ”MUFG currency analyst Lee Hardman said.
“Their constant desire to reach full employment before raising rates gives reassurance that rate hikes are unlikely until the end of next year / early 2023,” he said.
The pound will weaken if the EU does not respond to the UK’s request to extend a grace period for imports of chilled meat into Northern Ireland before the June 30 deadline, ING said.
“The background music about it had been positive last week, but not to hear anything until Wednesday – for example, would the waiver of EU rules be extended until the end of the year and the Kingdom – Uni would propose it unilaterally – could disrupt the GBP, “ING analysts mentioned.
“EUR / GBP looks set to continue trading calm ranges unless we see a break above the 0.8610 / 20 area – where GBP underperformance could emerge.”
Bitcoin was up 8.5% from its price at 5 p.m. ET on Friday to $ 34,935.98. The UK’s main financial regulator over the weekend ordered the local entity of Binance Holdings Ltd. to cease its activities in the country. Binance is the world’s largest cryptocurrency exchange network.
In the bond market, the yield on 10-year Treasuries edged down to 1.516% from 1.535% on Friday.
Barclays strategists have said they expect the European Central Bank to use its strategy review announcement later this year to lay the groundwork for an accommodating transition into quantitative easing, even in a post PEPP [Pandemic Emergency Purchase Program] world in 2022.
They say they expect asset purchases to continue at an average monthly rate of around € 60 billion in 2022, mainly through the regular asset purchase program.
“This should come as a conciliatory surprise to the market compared to current expectations,” Barclays said.
This would imply that the ECB would continue to absorb a “very significant” portion of the net supply of sovereign bonds during the remainder of 2021 and 2022, Barclays said.
The ECB is expected to publish the review of its strategy in the fall, possibly as early as September.
Futures contracts on Brent, the benchmark in international energy markets, fell. Traders await a meeting of the Organization of the Petroleum Exporting Countries and its allies on Thursday. The deal is expected to discuss a modest increase in production.
Gold prices rose after US price data fell below expectations on Friday.
While gold is generally viewed as a hedge against inflation, gold investors fear that high inflation will cause the Fed to raise interest rates earlier than initially suggested. This could increase bond yields and weigh on the precious metal.
Copper prices edged down early in the week amid concerns over the health of a major Chinese state-owned asset manager. Three-month copper on the LME edged down 0.2% to $ 9,421 per metric tonne.
Sentiment among Chinese traders weakened after reports that China asked another state-owned investment firm to look at the books of China Huarong Asset Management, said Anna Stablum of brokerage firm Marex.
China Huarong has been the subject of concerns since it missed the deadline for reporting results at the end of March. This has fueled speculation the company may be on the verge of default, Stablum said.
Data under review this week will be US consumer confidence on Tuesday, followed by the Chinese manufacturing PMI and US employment data later in the week.
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June 28, 2021 06:16 ET (10:16 GMT)
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