(Bloomberg) — European stocks followed Asian shares lower as enthusiasm about China’s latest stimulus pledge faded, while traders await key inflation data from the US as well as a European Central Bank policy decision later this week.
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The Stoxx Europe 600 index snapped an eight-day streak of gains, with basic resources and consumer products and services giving up some of Monday’s gains after China’s top leadership promised looser policy in 2025. A gauge of Asia-Pacific equities slipped, with China’s benchmark equity gauge wiping out most of its opening advance. US index futures edged lower after the S&P 500 slipped from nearly overbought technical levels on Monday.
US data including Wednesday’s consumer price index will offer Federal Reserve officials a final look at the pricing environment ahead of their meeting the following week. Any indication that progress has stalled on the inflation front could well undercut the chances of a third straight reduction in rates.
“A quiet docket awaits today, as participants continue to look ahead to tomorrow’s all-important US CPI report,” said Michael Brown, a senior research strategist at Pepperstone Group Ltd. “I’d still be a dip buyer of equities, given the continuing bull case of strong earnings growth, solid economic growth, and the ‘Fed put’ backstopping sentiment.”
The US Treasury 10-year yield rose one basis point to 4.21%, while the Bloomberg Dollar Spot Index was little changed.
On Thursday, the ECB is expected to cut its policy rate for a fourth time this year amid a deteriorating economic outlook and political turmoil in France and Germany, the region’s biggest economies.
Chinese President Xi Jinping’s decision-making Politburo vowed to embrace a “moderately loose” monetary policy in 2025, signaling more rate cuts ahead and shifting from a “prudent” strategy that’s held for nearly 14 years. Investors will now shift focus to annual closed-door Central Economic Work Conference due to start Wednesday, which may signal more fiscal measures.
“What they’re really targeting now with this monetary loosing is something that will address the consumer, and that’s really the crux of where the problems have been,” Burns McKinney, a fund manager at NFJ Investment Group LLC, said on Bloomberg Television. “If they can do that, then they can really harness of a burgeoning and growing middle class in China.”
