Stocks, US Futures Decline as Traders Trim Risk: Markets Wrap

(Bloomberg) — European stocks declined along with US equity futures as traders trimmed risk levels before a slew of economic data this week that may help illuminate the path forward for interest rates.

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The Stoxx Europe 600 edged lower at the open, with mining companies leading declines as iron ore extended a slump. Oil producers dropped as crude prices added to last week’s plunge. Koninklijke Philips NV jumped more than 10% after easing supply-chain challenges helped drive strong first-quarter earnings for the Dutch medical technology firm.

Contracts for the S&P 500 and the Nasdaq 100 extended losses following a muted end to trading last week. MSCI Inc.’s Asia Pacific Index was on course for the lowest close since the end of March. Treasury yields fell and a gauge of the dollar advanced.

Leveraged investors boosted net short positions on 10-year Treasury futures to a record 1.29 million contracts as of April 18, data from the Commodity Futures Trading Commission show. That’s an indication they think the Federal Reserve will keep raising rates to tackle inflation.

“We should take the Fed at face value when they say rates are not going lower this year,” said Kieran Calder, head of equity research for Asia at Union Bancaire Privée in Singapore, on Bloomberg Television. “Inflation, especially core inflation, remains really sticky.”

Swaps markets continue to see Fed rates peaking in coming weeks before a series of cuts later this year. US GDP data is forecast to reveal slowing growth, while the so-called core PCE deflator, the central bank’s preferred inflation gauge, is expected to show price growth cooled.

Investors may be marking time waiting to see if Fed will proceed with a widely-expected 25 basis-point hike at the May 2-3 meeting, Ed Yardeni, founder of Yardeni Research Inc., wrote in a note.

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Meanwhile, new Bank of Japan Governor Kazuo Ueda will hold his first policy meeting later this week. The central bank is planning to review and inspect policies taken over the past decades as soon as this week’s…

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