Shares maintain decline as ECB rises; US Futures Slip: Market Turning

(Bloomberg) — European equities held back declines after the European Central Bank raised its key rate and announced more tightening ahead. US futures slipped ahead of key economic data later Thursday.

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The Stoxx Europe 600 Index remained about 0.5% lower after the ECB raised its key rate by 75 basis points, in line with expectations. The euro extended losses against the dollar and German 10-year bund yields declined.

Contracts on the S&P 500 fluctuated ahead of a report that could show the US economy rebounded in the third quarter, while futures on the Nasdaq 100 retreated. Meta Platforms Inc. shares plunged as much as 21% in premarket trading after the Facebook parent company released a disappointing revenue forecast and asked investors for patience as costs rose.

Yields on the 10-year Treasury bond rebounded after previously climbing below 4%, with investors positioning themselves for less aggressive rate hikes as earnings and economic data indicate a slowdown. The US benchmark rate has fallen more than 20 basis points in the past two days. A dollar gauge gained after two days of sharp declines.

A contraction in the services and manufacturing sectors and fewer new home sales showed that the Fed’s efforts to cool the economy appear to be paying off. Still, economists expect the Fed to increase 75 basis points for the fourth time in a row next week. Traders have lowered expectations that interest rates will peak next year from 5% a week ago to 4.86%.

Oil fluctuated after hitting its highest level in about two weeks after US Secretary of State Anthony Blinken said a deal with Iran is unlikely to go through any time soon.

Traders have placed a bet on a rising price for aluminum as the US considers adding the metal to sanctions against Russia, a major producer. Iron ore futures plunged to their lowest point since May 2020 amid concerns about an economic slowdown in China.

Story continues

Main events this week:

Bank of Japan policy decision, Friday

US Personal Income, Personal Spending, Pending Home Sales, Consumer Confidence University of Michigan, Friday

Some of the key moves in markets:

Shares

S&P 500 futures had changed little as of 8:19 a.m. New York time

Nasdaq 100 futures fell 0.6%

Futures on the Dow Jones Industrial Average rose 0.7%

The Stoxx Europe 600 fell 0.6%

The MSCI World Index fell 0.1%

currencies

The Bloomberg Dollar Spot Index rose 0.4%

The euro fell 0.6% to $1.0023

The British pound fell 0.5% to $1.1566

The Japanese yen fell 0.3% to 146.80 per dollar

cryptocurrency

Bitcoin fell 0.7% to $20,599.1

Ether fell 0.3% to $1,548.52

bonds

10-year Treasury yield rose five basis points to 4.05%

German 10-year yield rose four basis points to 2.15%

UK 10-year yield had changed little at 3.58%

Raw materials

West Texas Intermediate Crude Oil Up 0.5% To $88.36 A Barrel

Gold futures fell 0.3% to $1,664.80 an ounce

–With help from Allegra Catelli, Richard Henderson, Ruth Carson and Masaki Kondo.

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