Equities pause as markets await new clues
investmentnews.comStocks wavered after last week’s strong rally as traders assessed the outlook for corporate earnings ahead of key data from the US that may give further clues on the Federal Reserve’s policy path.
The Stoxx Europe 600 index dipped following nine straight weeks of gains, the longest run in 12 years. Futures on the S&P 500 edged lower after Wall Street’s best weekly performance this year. Treasury yields ticked higher and the Bloomberg dollar spot index was steady.
Traders are in wait-and-see mode ahead of a busy week of economic data that will include the Fed’s preferred inflation gauge due Friday, when many markets will be closed for a holiday. While conviction has grown that the Fed will cut rates this year following dovish comments by Chair Jerome Powell last week, investors are becoming uneasy about stock valuations after the recent rally.
“When upward catalysts get rare and valuations are rich, risks become visible,” said Jeanne Asseraf-Bitton, head of research and strategy at BFT IM in Paris. “The coming weeks will be more complicated.”
Still, European equity valuations are not yet over-stretched, according to Goldman Sachs Group Inc. strategists who forecast the Stoxx Europe 600 could still rise about 6% over the next 12 months.
Shares in European defense firms rose following a terrorist attack in Moscow on Friday evening that killed at least 137 people, in an assault claimed by the Islamic State. Dassault Aviation SA climbed more than 4% and Rheinmetall AG was up 2.6%. Direct Line Insurance Group Plc plunged after Ageas said on Friday it won’t make a third takeover offer.
In US premarket trading, Intel Corp. and Advanced Micro Devices Inc. decline after a Financial Times report said China was seeking to limit the
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