© Reuters. FILE PHOTO: FILE PHOTO: A passerby walks past an electric monitor displaying various countries’ stock price index outside a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issei Kato/
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BAC
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GS
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MS
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DX
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Gold
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LCO
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CL
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TSLA
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By Elizabeth Howcroft
LONDON (Reuters) – World shares were steady near their recent 15-month highs and the dollar held close to a one-year low on Tuesday as investors paused to take stock of weak economic data from China and waited for U.S. retail sales data and earnings.
Asian stocks fell earlier in the session as markets caught up with growth data from Monday showing the post-pandemic bounce in China’s economy was over.
Deutsche Bank (ETR:DBKGn) said it was lowering its forecast for China’s economic growth this year, following similar moves on Monday by J.P.Morgan, Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C).
At 0806 GMT, the MSCI World Equity index was little changed at 697.27, near the 698.39 reached on Friday, which was the highest since April 2022.
European shares made minimal gains, with the STOXX 600 and London’s FTSE 100 both up 0.2%, while Germany’s DAX was up just 0.1%.
“China is super important to Europe,” said Fiona Cincotta, senior markets analyst at City Index. “There are a lot of concerns about what weakness in China could mean for Germany and the German economy and I think we’re seeing that being played on in the DAX, which is struggling to push higher.”
Investors were waiting for U.S. retail sales and industrial production figures later in the session, which could give indications about the Federal Reserve’s policy outlook.
The Fed, European Central Bank and Bank of Japan hold policy meetings next week.
“Any sense that the Federal Reserve has reached peak interest rates or any sense that they’re turning less hawkish or more dovish will be that injection that stocks need to take the next leg higher,” Cincotta said.
Expectations that the Fed and ECB will diverge on rate hikes have caused the dollar to weaken recently.
Money markets have largely priced in a 25-basis-point rate hike from the Fed at its policy meeting later this month, though there are expectations that rates will come down as early as December.
Conversely, investors expect the ECB and the Bank of England to extend their rate-hike cycle.
The U.S. dollar index was down 0.1% at 99.792, having reached its lowest since April 2022 on Friday.
The euro hit a fresh 17-month high of $1.1276 around 0732 GMT, before easing to trade up 0.1% on the day at $1.1237.
Euro zone government bond yields were down, with the German 10-year yield hitting its lowest since July 3 at 2.368%, down around 8 basis points on the day.
Benchmark 10-year notes were down around 4 bps on the day, with a yield of 3.7579%.
Investor are also keeping an eye on quarterly results this week, with big banks such as Bank of America (NYSE:BAC), Morgan Stanley and Goldman Sachs (NYSE:GS) posting earnings.
Tesla (NASDAQ:TSLA) reports later this week, which will allow the market to take a closer look into how large U.S. corporations are faring, following the recent equities rally.
Oil prices were little changed, with Brent crude steady at $78.43 per barrel and U.S. West Texas Intermediate crude at $74.27, up 0.16%.
Spot gold was up 0.33% at $1,961.1 an ounce.
Source: Investing.com