(Bloomberg) – Stocks and the dollar were flat on Monday as investors watched the impact of price pressures on monetary policy and the pace of economic recovery. Treasury yields have increased.
US futures were little changed after all major US stock indexes hit record highs on Friday and the S&P 500 posted its fifth consecutive weekly rally. The European Stoxx 600 index was also balanced, with energy companies rising and retailers falling.
Markets will be closely watching a measure of US consumer prices on Wednesday after gains in the US wage bill last week also showed an increase in average hourly earnings. According to Bloomberg Intelligence, the reading is expected to show the fastest-paced price pressures in three decades amid supply chain bottlenecks and rising energy.
âInflation is the biggest headwind right now,â Dana D’Auria, co-chief investment officer at Envestnet, told Bloomberg Television. “There is a disconnect at this point between some of the expectations we have about inflation and what consumers are feeling on the ground.”
Pfizer Inc. increased pre-market trading after the drugmaker said its Covid-19 pill could reduce hospitalizations and deaths in high-risk patients by 89%. Tesla fell after Elon Musk’s Twitter followers voted to sell 10% of its stake in a poll organized by the electric car chief.
In Europe, Henkel and H&M shares fell amid concerns over inflation-linked earnings, while Siemens Gamesa surged after being named the preferred supplier to Norfolk’s offshore wind projects in the UK. Richemont hit a record after a report that activist investor Dan Loeb’s Third Point LLC took a stake in the Swiss luxury goods company.
The inflation debate continues to cloud markets that had taken some comfort from a strong earnings season despite higher inflation and supply chain grunts. Kansas City Federal Reserve Bank President Esther George said the risk of a prolonged period of high inflation has increased and the argument for patience has diminished.
The CPI numbers for October and November “are very important considerations about where the Fed will go,” Mahjabeen Zaman, senior investment specialist at Citigroup, told Bloomberg Radio. “There is an upside risk in these two CPI digits and, therefore, there is actually a risk that the Fed will actually step up the pace of asset purchases.”
Meanwhile, oil rose as traders weighed the odds of a release of crude from the US Strategic Oil Reserve after OPEC + resisted a call from President Joe Biden to increase supplies faster. European gas and electricity prices have jumped on signs that Russia will not deliver the increase in supplies promised by President Vladimir Putin.
In China, the Communist Party is meeting for the first time in over a year this week. The rally is expected to lay the groundwork for extending the term of President Xi Jinping, who rocked the markets with his “common prosperity” campaign to redistribute the country’s wealth.
The country posted a record monthly trade surplus in October as exports surged, underscoring support for the Chinese economy which has slowed sharply in recent months. In the United States, the House on Friday passed the largest US infrastructure package in decades.
To watch this week:
- The Communist Party of China Central Decision-Making Committee begins meeting on Monday. Until November 11.
- Federal Reserve Bank of San Francisco President Mary Daly speaks on Tuesday
- Global financing of China, money supply and new loans in yuan on Tuesday
- China PPI Wednesday
- Wholesale stocks in the United States, CPI, first jobless claims on Wednesday
- The marked American bond is closed on Veterans Day on Thursday
- China hosts its annual Singles Day, the world’s largest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure shoppers with bargains on Thursday
For more market analysis, read our MLIV blog.
Some of the main movements in the markets:
- S&P 500 futures were little changed at 6:27 a.m. New York time
- Futures contracts on the Nasdaq 100 remained unchanged
- Futures contracts on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 has changed little
- The MSCI World index rose 0.2%
- The Bloomberg Dollar Spot Index changed little
- The euro was little changed at $ 1.1565
- The British pound was little changed at $ 1.3491
- The Japanese yen was little changed at 113.46 per dollar
- The yield on 10-year treasury bills rose three basis points to 1.48%
- German 10-year rate rose two basis points to -0.26%
- UK 10-year yield rose four basis points to 0.89%
- West Texas Intermediate crude rose 1.5% to $ 82.47 a barrel
- Gold futures have changed little
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