US Futures Drop Ahead of Jobs Data; Nvidia Slips: Markets Wrap

　　(Bloomberg) -- American equity futures slipped as a rally in tech megacaps ran out of steam ahead of jobs data that may give more clues on the outlook for US interest rates.

　　Contracts on the S&P 500 and Nasdaq 100 were down around 0.4%. Tesla Inc. shares fell more than 1% in premarket trading, surrendering some of yesterdays 6% gain. Nvidia Corp., Meta Platforms Inc. and Apple Inc. also declined.

　　The 10-year Treasury yield held Mondays rise, which was fueled by speculation that a Donald Trump presidency would lead to greater US fiscal deficits and higher inflation. A gauge of the dollar headed higher for a second day.

　　Recent data has showed inflation in the US moderating, which is supportive of stocks in the short term, according to UBS chief strategist Bhanu Baweja. But signs of slowing economic growth will weigh on shares more broadly in the medium term, calling for defensive positioning, he said on Bloomberg TV.

　　“The central pillar of how markets are likely to trade over the next six months is lower inflation first in the US, followed by lower growth in the US.” Baweja said. “We are risk-off in equities, broadly.”

　　Treasuries have been whipsawed this year as traders swung between buying bonds amid signs of cooling US prices and fears of higher-for-longer rates. Yields on five-year securities have climbed more than 20 basis points from a low of about 4.20% just under three weeks ago.

　　After last week‘s debate hurt Joe Biden’s chances of winning reelection, Wall Street strategists — including ones from Goldman Sachs Group Inc., Morgan Stanley and Barclays Plc. — are taking a fresh look at how a Trump victory could play out in the bond market. Theyre urging clients to position for sticky inflation and higher long-term yields.

　　Strategists at JPMorgan Chase & Co., on the other hand, said its now time to pocket profits on Treasuries.

　　Federal Reserve Chair Jerome Powell‘s speech at an ECB forum in Portugal may provide more clues on the outlook for policy. The ECB’s Lagarde is also scheduled to speak.

　　Traders will also eye data on US job openings later Tuesday. Strength in hiring has so far helped the economy weather aggressive Fed tightening, which brought interest rates to the highest levels in two decades. With inflation still running above the central banks 2% target, the fear is that any further softening in labor conditions could start to snowball and put economic growth at risk.

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　　Meanwhile, European stocks declined after policy makers signaled they need more evidence that price pressures are under control, even as the latest data showed euro-region inflation moderating slightly.

　　French Election Woes

　　The Stoxx Europe 600 benchmark dropped about 0.7%, led by insurers and car makers. France‘s CAC 40 erased most of Monday’s gains as the country prepares for a second election round, with the outlook for French assets still uncertain. US equity futures slipped.

　　Euro-area consumer prices slowed in line with economists estimates in June, though the core measure, which excludes volatile items such as food and energy, unexpectedly remained unchanged.

　　After trimming interest rates by a quarter-point in June, officials are determining whether inflation is moderating enough to allow further cuts. At this week‘s annual ECB retreat in Sintra, Portugal, President Christine Lagarde and Chief Economist Philip Lane said there’s no convincing evidence yet that the threat has passed.

　　Lagarde “has telegraphed the message very well,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. “Were not expecting a change in July but rather in September and December.”

　　The rally in European stocks has stalled in recent weeks due to political turmoil following a snap election call in France. The first round of the legislative elections narrowed the possible outcomes to two — both of which presage prolonged uncertainty for investors. The second round of voting is scheduled for Sunday.

　　“We‘re expecting that France will be harder to govern, and there will be less reforms, it’s not a positive,” said Carrier.

　　Among individual stocks, shares in food services company Sodexo SA fell revenue for the third quarter missed estimates. Tyre maker Michelin slipped in Paris, with analysts citing a pre-close call after markets closed on Monday.

　　HelloFresh SE shares jumped after JPMorgan said data indicate stabilization in the key North America meal-kit business. Siemens Energy AG rose as much as 4.3% after the Financial Times reported that the company plans to hire over 10,000 new employees in its grid business.

　　Asian shares increased, led by gains in Japan and Hong Kong. The MSCI AC Asia Pacific Index hit its highest since late May amid a rally in Hong Kong-listed property and electric vehicle maker shares.

　　In commodities, oil traded near a two-month high on an escalation in tensions in the Middle East and concerns over the rapid start to the Atlantic hurricane season. Iron ore held near the highest close in about a month. Gold was little changed.

　　Key events this week:

• US job openings, Tuesday
• Jerome Powell and Christine Lagarde speak at ECB forum in Portugal, Tuesday
• China Caixin services PMI, Wednesday
• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
• US Fed minutes, ADP employment, ISM Services, factory orders, initial jobless claims, durable goods, Wednesday
• Feds John Williams speaks, Wednesday
• UK general election, Thursday
• US Independence Day holiday, Thursday
• Eurozone retail sales, Friday
• US jobs report, Friday
• Feds John Williams speaks, Friday

　　Some of the main moves in markets:

　　Stocks

• S&P 500 futures fell 0.4% as of 6:38 a.m. New York time
• Nasdaq 100 futures fell 0.5%
• Futures on the Dow Jones Industrial Average fell 0.3%
• The Stoxx Europe 600 fell 0.7%
• The MSCI World Index was little changed

　　Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.2% to $1.0714
• The British pound was little changed at $1.2638
• The Japanese yen fell 0.1% to 161.67 per dollar

　　Cryptocurrencies

• Bitcoin fell 1% to $62,605.54
• Ether fell 0.5% to $3,444.97

　　Bonds

• The yield on 10-year Treasuries was little changed at 4.45%
• Germanys 10-year yield was little changed at 2.61%
• Britains 10-year yield declined two basis points to 4.26%

　　Commodities

• West Texas Intermediate crude rose 0.8% to $84.05 a barrel
• Spot gold fell 0.3% to $2,324.35 an ounce