© Reuters. FILE PHOTO: A man passes by an electronic screen displaying Japan’s Nikkei share average as it scaled an all-time closing high in Tokyo, Japan February 26, 2024. REUTERS/Issei Kato/File Photo
By Nell Mackenzie and Wayne Cole
LONDON/SYDNEY (Reuters) – Wall Street looked to open lower on Monday as investors braced for a week packed with central bank events and major data that could refine market wagers.
U.S. stock index futures tipped lower with down by 0.1% and Nasdaq futures trading largely flat worn out by record-closing highs in the prior session, as investors paused at the start of a week packed with key jobs data and Fed Chair Jerome Powell’s congressional testimony.
“We’re currently on a run that you may not see again in your lifetimes,” Jim Reid, strategist at Deutsche Bank, said in a note.
The last week completed a run of 16 positive weeks out of the last 18 for the first time since 1971, he noted. If the S&P finished this week also higher it would be the first time it had such a run since 1964.
Federal Reserve Chair Jerome Powell testifies before lawmakers on Wednesday and Thursday, though analysts assume he will stay in wait-and-see mode on policy given recent upside surprises on inflation that have helped temper market rate cut bets.
The February payrolls report on Friday could also shift the calculus with forecasts favouring a still-solid rise of 200,000 after January’s barnstorming 353,000 jump.
“We are still in an environment of economic improvement. Friday’s U.S. employment data will tell us a lot about where we are in terms of wage inflation and consumer resilience,” said Lilian Chovin, head of asset allocation at the British private bank, Coutts.
“It will also inform on whether the current narrative is sustainable.”
In Europe, a UK budget on Wednesday is followed by the European Central Bank’s policy meeting on Thursday. The ECB is considered certain to keep rates at 4.0%, but also lower its outlook for inflation in a nod to eventual cuts.
Europe’s broadest stock index and the German steadied while French stocks rose by 0.1% and UK markets fell by 0.5%.
Other events of note this week include U.S. President Joe Biden’s State of the Union address on Thursday, the Super Tuesday U.S. primaries and China’s National People’s Congress (NPC) meeting starting on Tuesday which might flag new stimulus measures.
The Bank of Canada also meets this week and the expectation is it will stay on hold, with a first cut seen in June or later.
NIKKEI HEADS NORTH
closed on a fresh high, breaking 40,000 for the first time, having risen for five weeks straight.
An upbeat report on fourth quarter capex out Monday suggested GDP change could be revised to positive from negative, meaning Japan was not in recession after all. That added to speculation a strong wage round could lead the Bank of Japan to end negative rates in April.
BofA analyst Savita Subramanian now sees the S&P 500 pushing on to 5,400, thanks to solid earnings, though there is a risk of a correction given how far the market has come.
“The era of lower quality growth where cheap capital and globalization contributed to margins is over,” says Subramanian. “Now it’s time for sustainable efficiency and productivity gains supported by automation and AI.”
In currency markets, the dollar steadied after some soft U.S. economic data, while the yen firmed ahead of Tokyo consumer price data on Tuesday that is expected to show inflation sprang higher in February.
The dollar was steady against a basket of other currencies. The euro ticked up slightly to $1.0849 after bouncing from a low of $1.0796 last week.
, meanwhile, scaled a two-year high, breaking $64,000 as a wave of money carried it within striking distance of record levels.
The U.S. data surprise had helped gold to a two-month top and the precious metal was last trading steady at $2,082.69 an ounce. [GOL/]
Oil prices fell even though OPEC+ members led by Saudi Arabia and Russia agreed on Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter. [O/R]
fell 44 cents to $83.11 a barrel, while declined 54 cents to $79.43 per barrel. [O/R]