(Bloomberg) — European shares struggled for traction in thin trading after a European Central Bank official warned that policy will have to stay restrictive all year.
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The Stoxx Europe 600 index was little changed. Turnover was less than half the 20-day average for the time of day, with UK and US markets closed for holidays. American equity futures and the dollar were steady.
The European Central Bank is on track to start cutting interest rates next month, but will have to keep policy in restrictive territory through 2024, Chief Economist Philip Lane told the Financial Times in an interview published Monday. A rate cut in June has been widely telegraphed, but subsequent steps are less clear. Data this week may show headline inflation in the euro region ticked up in May.
“European inflation is back,” though the May spike may be temporary, Credit Agricole SA strategists led by Jean-François Paren wrote in a note. “This does not call the June cut into question but adds risk of de-pricing additional cuts later.”
Among individual movers in Europe, Alstom SA rose as much as 6.3% after the French railway-equipment maker launched a rights issue at a subscription price with a 25% discount. Bakkafrost P/F fell as much as 6.1%, the most since April, after the Oslo-listed Faroese salmon farmer said it found the infectious salmon anemia virus some of its pens.
The MSCI Asia Pacific index posted its biggest gain since May 16, led by stock gauges in Hong Kong, China, and Japan.
A swath of inflation prints from Australia to Japan, the euro region and the US is due this week as traders finesse bets on the outlook for monetary policy. The Federal Reserve’s favorite measure of underlying inflation is due on Friday and is expected to show modest relief. Fed Chair Jerome Powell has stressed the need for more evidence that inflation is on a path to the 2% goal before easing policy.
The ECB’s Lane is due to speak about inflation in Dublin on Monday. John Williams, Lisa Cook, Neel Kashkari and Lorie Logan are among the US central bankers due to speak this week.
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Trading of cash Treasuries was closed. The “T+1” rule that has the potential to cause trouble for overseas investors will come into effect when traders return from the long weekend — making US equities settle in one day rather than two.
Meanwhile, gold edged higher, while iron ore and copper futures fell. Crude oil steadied after its biggest weekly loss in four. This year has witnessed a rolling series of commodity price spikes thanks to supply constraints, surging demand and even some speculative activity.
Some key events this week:
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ECB’s Philip Lane speaks in Dublin on inflation, Monday
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IMF holds discussions with Ukrainian authorities to review economic policies as the country seeks to unlock next tranche of $2.2 billion in aid, Monday
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Cleveland Fed President Loretta Mester speaks at BOJ event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knot address Barclays-CEPR International Monetary Policy forum, Tuesday
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South African election, the most significant since the end of apartheid, Wednesday
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Fed releases Beige Book economic survey, Wednesday
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South Africa rate decision, US initial jobless claims, GDP, wholesale inventories, Thursday
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New York Fed President John Williams speaks at the Economic Club of New York, Thursday
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GDP data published for Canada, Eurozone, Turkey, Friday
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Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 was little changed as of 11:43 a.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 0.9%
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The MSCI Emerging Markets Index rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro rose 0.1% to $1.0859
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The Japanese yen was little changed at 156.87 per dollar
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The offshore yuan was little changed at 7.2559 per dollar
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The British pound rose 0.1% to $1.2753
Cryptocurrencies
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Bitcoin fell 0.3% to $68,447.16
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Ether rose 0.8% to $3,890.56
Bonds
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The yield on 10-year Treasuries declined one basis point to 4.46%
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Germany’s 10-year yield declined two basis points to 2.56%
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Britain’s 10-year yield was little changed at 4.26%
Commodities
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Brent crude rose 0.5% to $82.55 a barrel
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Spot gold rose 0.5% to $2,345.65 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Catherine Bosley and Michael Msika.
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