By Lawrence White
LONDON (Reuters) -European stocks slipped while bond yields fell on Monday, as markets awaited an earnings report from $5 trillion chipmaker Nvidia and U.S. jobs data later in the week that could give direction to nervous global markets.
Europe’s benchmark index of 600 big stocks slid 0.4% following a global selloff last week triggered by concerns about overvaluation in technology shares and diminished hopes of rate cuts by the Federal Reserve.
Wall Street looked set for a slightly more positive open with S&P 500 futures ticking 0.2% higher and Nasdaq 100 futures up 0.4%.
Expectations of a U.S. interest rate cut in December have fallen to less than 50% following hesitant remarks from policymakers concerned about inflation. That has started to put pressure on stocks, especially in the frothy and rates-sensitive technology sector.
Germany’s 10-year yield fell 1.5 basis points (bps) to 2.70%, after rising 3 bps on Friday, when it touched its joint-highest since October 7 at 2.718%.
With European Central Bank policy on hold, all eyes are on the United States where Thursday’s delayed September jobs report is expected to confirm earlier private surveys showing a slowdown in the labour market.
“If all it does is confirm that, it’s not going to change the tune of the more hawkish Fed officials. They are more worried about inflation upside risks, so CPI data for them will be critical,” said ANZ’s head of research in Asia, Khoon Goh.
Ten-year U.S. Treasury yields were steady at 4.1192% on Monday.
On Friday, rate cut expectations had cooled when Kansas City Fed President Jeffrey Schmid and Dallas Fed President Lorie Logan cast doubt on the need to cut next month.
US CORPORATE GIANTS’ EARNINGS IN FOCUS
Home Depot, Target, Walmart and Nvidia report earnings in the U.S. this week and investors are focused on the chipmaker, whose performance has come to be seen as a bellwether for the sustainability of this year’s remarkable run in Artificial Intelligence-related stocks.
Nvidia shares have soared about 1,000% since the launch of ChatGPT in November 2022. This includes a year-to-date gain of more than 40% that made Nvidia the first company to surpass $5 trillion in market value last month.
Shares in Google parent Alphabet also jumped 5.6% in premarket trading on Monday after Berkshire Hathaway disclosed a stake in the company, while the conglomerate synonymous with legendary investor Warren Buffett also revealed it trimmed its stake in Apple.
In foreign exchange, the U.S. dollar was up slightly, holding the euro just below $1.16 and creeping higher on other majors, while the yen barely reacted to data on Monday that showed Japan’s economy shrank an annualized 1.8% in the three months through September.
Gold edged down to $4,078 an ounce, albeit the precious metal has soared 55% this year from a price of $2,624 an ounce on January 1 as safe-haven demand, geopolitical tensions and expectations of lower rates burnished its appeal.
Brent crude futures firmed to $64.4 a barrel as loading resumed at a Russian hub hit previously by a Ukrainian attack.[O/R]
Bitcoin, which has lately behaved as a barometer of the mood on technology stocks, is nursing its largest weekly fall since March, having lost more than 10% last week. It traded up 2% on Monday at $95,390.
(Reporting by Lawrence White in London and Tom Westbrook in Singapore; Editing by Jamie Freed and Christopher Cushing)
