Stocks are falling with key economic data on the horizon

  • Euro Stoxx fell 0.2%.
  • The dollar is holding near its highest level in six weeks
  • Focus on European and American PMIs
  • Wall Street is preparing to open up

LONDON/SINGAPORE (Reuters) – European stocks fell on Tuesday ahead of key data that will provide a window into the health of major economies, while the dollar hovered near six-week highs.

The Eurozone, Britain, France and the US are all set to publish PMI data for February, as market participants watch for signs of the impact of tightening monetary policy on activity.

In early trading, the Euro STOXX 600 Index (.STOXX) fell 0.2%, with major indices in Germany, France and Britain opening slightly in the red.

The data comes at an important time for stock markets, whose strong start to the year after a bruising 2022 came to a halt in February.

“We are at a pivotal moment, where investors are considering restarting some positions,” said Francesco Sandrini, Head of Multi-Asset Strategies at Amundi. “These numbers are really important.”

Manufacturing activity in the Eurozone is seen contracting in February, albeit at a slower rate than in the past five months. Services business is expected to expand modestly.

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Its data showed that German business activity returned to growth for the first time in eight months in February, thanks to the easing of supply bottlenecks and an improvement in underlying demand.

The MSCI World Stock Index (.MIWD00000PUS), which tracks stocks in 47 countries, fell 0.2%.

US markets, which were closed on Monday for the President’s Day holiday, were on course for slight losses. E-mini futures for the S&P 500 fell 0.5%.

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Earlier, Asian stocks also fell, weighed by the prospect of the US Federal Reserve staying on its hawkish path.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.9% to 529.97, down from the six-week low of 529.05 it touched last week.

The round of purchasing managers’ indexes began in Japan, where manufacturing activity contracted at the fastest pace in 30 months in February, as the world’s third-largest economy grappled with weak demand and struggled to tame cost pressures.

Nikkei (.N225) closed down 0.2%.

Data and dollars

The dollar index, which measures the greenback against six other rivals, was latest at 104.11, just below a six-week high of 104.67 touched on Friday.

Meanwhile, the euro fell 0.2% to $1,067, and is set to snap four consecutive months of gains and end February lower.

Investors are also firmly focused on the release of minutes from the Federal Reserve’s last meeting on Wednesday earlier this month when it raised interest rates by 25 basis points.

The market is now pricing in US interest rates to peak at 5.30% in July and remain above 5% by the end of the year, diverging from expectations for deeper rate cuts this year. The yield on the 10-year Treasury rose 2.3 basis points to 3.852%, after touching a three-month high of 3.929% on Friday.

The yield on the 30-year Treasury rose 1.1 basis points to 3.899%, while the yield on the two-year US Treasury note, which usually moves according to interest rate expectations, rose 3.5 basis points to 4.658%.

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Oil prices fell as concerns that a global economic slowdown will reduce demand for fuel prompted investors to take profits from the previous day’s gains. Brent crude was last down 66 cents, or 0.8 percent, at $83.41 a barrel.

Additional reporting by Tom Wilson in London and Ankur Banerjee in Singapore; Editing by Shri Navaratnam, Himani Sarkar and Christina Fincher

Our standards: Thomson Reuters Trust Principles.

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