European stocks, US futures waver; Treasuries steady

Bloomberg

Stocks in Europe struggled for direction along with US equity futures as news of further moves by China to reopen its economy failed to lift investor sentiment in the final week of a dismal year for markets.
The Stoxx Europe 600 index erased an early advance, with carmakers and technology stocks leading declines. Basic-resources stocks rose as prices for industrial metals including copper climbed. S&P 500 futures swung between small gains and losses after the index fell as much as 0.4%. Treasury yields ticked lower after the selloff, and a gauge of the dollar was steady.
The cautious sentiment s damping hopes for a rally in the last trading week of 2022 after a brutal year for financial markets. Global equities have lost a fifth of their value, the largest decline since 2008 on an annual basis, and an index of global bonds has slumped 16%. The dollar has surged 7% and the US 10-year yield has jumped to above 3.80% from just 1.5% at the end of 2021.
Reports that China would drop quarantine requirements for inbound visitors and begin issuing passports and Hong Kong travel permits to mainland residents, may be a boost for the global economy, but they’re also raising concern about inflation pressures which could prompt the Federal Reserve to maintain tight monetary policy.
“We may get a pivot later on next year from the Fed where they actually start cutting rates, but that’s going to happen when the situation is going to become much more dire than it is now,” Matt Maley, chief market strategist for Miller Tabak + Co., said on Bloomberg TV. “If we just have this slow grind lower, the Fed’s going to keep interest rates at high levels even if they stop raising rates in any kind of way.”
Oil dipped amid thin liquidity as investors weighed the fallout from a Russian ban on exports to buyers that adhere to a price cap. Iron ore surged to its highest since early August, while copper gained in New York as China’s rollback of pandemic curbs boosted prospects for commodities demand in 2023.
The Stoxx Europe 600 was little changed as of 9:11 am London time and S&P 500 futures were little changed.
While Nasdaq 100 futures fell 0.2%, futures on the Dow Jones Industrial Average were little changed. The MSCI Asia Pacific Index fell 0.2% and the MSCI Emerging Markets Index was little changed.
While the Bloomberg Dollar Spot Index was little changed, the euro falls 0.1% to $1.0629.
The Japanese yen fell 0.5% to 134.18 per dollar and the offshore yuan also plunges 0.1% to 6.9763 per dollar. The British pound was little changed at $1.2022.
The yield on 10-year Treasuries declined two basis points to 3.83% and Germany’s 10-year yield declined four basis points to 2.49%. Britain’s 10-year yield advanced 10 basis points to 3.74%.