Global markets were mixed Monday, with U.S. futures edging lower in holiday trading ahead of another busy stretch of economic data.
Futures tied to the S&P 500 slipped 0.3%, while Dow Jones Industrial Average futures lost 0.4%, as of late afternoon trading in London. Contracts tied to the tech-focused Nasdaq-100 ticked down 0.2%. U.S. stock and government-bond markets were closed Monday to mark Presidents Day.
Chinese markets led global gains, while European indexes were subdued.
Data this week could give an indication of how sticky U.S. inflation is likely to remain in the near future and how economic growth is holding up—two crucial questions for investors as they try to assess the outlook for central-bank policy and corporate profits.
“There’s this new narrative that we will see a pause in inflation before it falls,” said
Edward Park,
chief investment officer at U.K. investment firm Brooks Macdonald. “The stickier inflation is, the tougher the Federal Reserve will need to be.”
Stocks could be weighed down by rising concerns about U.S. rate increases, said
Mark Matthews,
head of research for Asia at Julius Baer.
“The market could be susceptible to a bit of a panic attack,” Mr. Matthews said. Given the strength of the U.S. economy, the worry is that inflation could ease at a slower-than-expected pace, he added.
Two Fed officials last week said they supported a larger rate increase at the central bank’s February meeting than the quarter-percentage-point increase the Fed implemented, and two sets of inflation data also came in hotter than expected. Minutes from that Fed meeting are set to be published Wednesday.
S&P Global’s monthly surveys of manufacturing and service sectors around the world are due Tuesday. And the Commerce Department will publish its personal-consumption expenditures price index Friday—a gauge of inflation closely watched by the Fed. Another yardstick, the consumer-price index, showed annual inflation cooled slightly in January, though the pace of moderation has leveled off.
Friday action in New York, where stock markets are shut Monday for Presidents Day.
Photo:
BRENDAN MCDERMID/REUTERS
This week will also bring quarterly results from large companies including Walmart, Home Depot and the Chinese technology giant Alibaba.
In Europe, the pan-continental Stoxx Europe 600 gained 0.1% Monday.
In Asia, China’s broad CSI 300 index closed up 2.5%, its biggest single-day rise this year. The Shanghai Composite Index gained 2.1%, and Hong Kong’s Hang Seng Index rose 0.8%.
The gains came after China’s central bank said lenders had kept the country’s benchmark lending rates unchanged, as the world’s second-largest economy showed more signs of recovery following its Covid reopening.
In a report Monday,
forecast the MSCI China index will rise 24% from current levels by the end of the year as the country returns to growth. “Covid is arguably in the rear view mirror now in China,” wrote analysts at the U.S. bank.
Diplomatic tensions between the U.S. and China are again rising, with senior Beijing and Washington officials trading barbs over the downed Chinese balloon in a tense atmosphere of public speeches and a secret meeting Saturday.
“It just has become more evident that those tensions haven’t gone away,” said
Kerry Craig,
Melbourne-based global market strategist at J.P. Morgan Asset Management. “You just can’t get away from geopolitics as an investor these days.”
Nonetheless, Mr. Craig said China’s potential for economic growth, consumption-driven demand and attractive valuations still trump lingering geopolitical concerns.
In India, the S&P BSE Sensex Index lost 0.5%, putting it in negative territory for 2023. Shares of most companies linked to billionaire
Gautam Adani
retreated, with his conglomerate’s flagship
falling nearly 6%.
Almost a month ago, U.S. short seller Hindenburg Research released a report alleging the Adani Group had manipulated stock prices, among other things. The report triggered a $100 billion-plus selloff in stocks bearing the Adani name. The conglomerate has denied the claims.
Write to Dave Sebastian at dave.sebastian@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com
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