European stocks edge higher, US futures slip

Bloomberg

Stocks in Europe edged higher while US equity futures slipped on a day abounding with risks including key economic data, company earnings and the Federal Reserve policy meeting.
The Stoxx Europe 600 index held a modest advance after a report showed inflation in the euro area slowed more than economists’ expectations in January, suggesting heated debate to come at the European Central Bank over how much more interest rates must rise. The gauge closed January with a 6.7% gain, the best start to a year since 2015.
Futures on the S&P 500 and Nasdaq 100 ticked lower after the Nasdaq jumped more than 10% in a January rebound unseen in more than two decades. An index of global stocks excluding the US is making history with a gain of 8.6% in January — the best start to a year on record.
The stellar rally has set equity markets up for a showdown with the Fed as traders position for a pivot which Chair Jerome Powell and his colleagues may not be ready to deliver. Wage cost data that undershot forecasts, a cooling housing market dwindling consumer confidence suggest the Fed’s rate hikes over the past year have begun to curtail inflation, but still-loose financial conditions are complicating the central bank’s task.
“The outcomes for inflation are looking better than they did a few months ago, but the war against inflation is far from won,” Aninda Mitra, Head of Asia Macro and Investment Strategy for BNY Mellon said in an interview with Bloomberg Television. “Wages are still high, the jobs market is still tight.”
Treasury yields drifted lower and the dollar was steady before the Fed statement, where it’s forecast to unveil a 25 basis point rate increase.
Elsewhere in markets, Bitcoin added slightly to its near 40% rally this year, with a test ahead when the Fed decision comes. Iron ore held near a seven-month high as major exporter Vale SA announced lower-than-expected fourth-quarter production, while oil edged higher. Crude oil was little changed.
The Stoxx Europe 600 rose 0.2% as of 10:11 am London time and S&P 500 futures fell as much as 0.4%.
While Nasdaq 100 futures fell 0.3%, futures on the Dow Jones Industrial Average also drop 0.5%.
The MSCI Asia Pacific Index rose 0.8% and the MSCI Emerging Markets Index also climbs 1.1%.
The Bloomberg Dollar Spot Index fell 0.1% and the euro rose 0.2% to $1.0890.
The Japanese yen rose 0.1% to 129.91 per dollar and the offshore yuan rose 0.2% to 6.7443 per dollar. The British pound was little changed at $1.2319.
Bitcoin rose 0.2% to $22,995.16 and ether fell 0.2% to $1,574.15. The yield on 10-year Treasuries declined three basis points to 3.48% and Germany’s 10-year yield was little changed at 2.28%. Britain’s 10-year yield declined two basis points to 3.31%.