VINACHEM

The dollar extended a decline, while US equity futures were steady after a three-week stock rally fueled by speculation the Federal Reserve is nearing the end of its rate-hike cycle.

Contracts on the S&P 500 were little changed and those on the Nasdaq 100 dipped 0.1%. A gauge of the dollar fell for a third day to its lowest level since August. Treasury yields edged higher ahead of a US 20-year auction.

The Stoxx Europe 600 index was little changed at the open. Bayer AG slumped more than 10% after the German pharmaceutical stopped a key drug trial and suffered a defeat in a trial related to its Roundup weed killer. Ashtead Group Plc plunged after the UK equipment-rental company cut its revenue forecasts.

Traders are currently pricing in about a 30% chance of a first Fed rate cut in March after Vice Chair for Supervision Michael Barr said Friday officials are likely at or near the end of their tightening campaign. Traders are awaiting publication later this week of minutes of the last Fed rates meeting for insight into policy makers’ thinking.

“The dovish Fed narrative remains in place,” said Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. “There is likely to be ongoing downward pressure on US yields and the dollar.”

Still, “does one month of somewhat favorable inflation data really warrant such a massive move in rates? We think not and yet here we are. We must respect this move while wholeheartedly disagreeing with it,” he wrote in a research note.

Moody’s Lifts Italy

Meanwhile, Italy’s yield premium over German bonds narrowed after Moody’s Investors Service lifted its outlook on the country’s debt to stable, removing the immediate threat of a downgrade to junk. Italy’s benchmark stock index edged higher.

European natural gas prices jumped after a vessel seized in the Red Sea by Iran-backed Houthi rebels renewed concerns that the Israel-Hamas war could affect vital waterways for the fuel. Benchmark futures increased as much as 6.9% on Monday, halting a four-day run of declines. The increase was also driven by colder weather forecasts and higher crude prices ahead of an OPEC+ meeting later this week.

A number of European Central Bank officials are set to speak Monday and may provide insights into their own rate-hike cycle.

The offshore yuan strengthened after the People’s Bank of China boosted its daily reference rate for the currency to the strongest since August. The nation’s commercial lenders on Monday kept their benchmark lending rates unchanged, in line with the central bank’s decision this month to maintain policy rates in favor of other means to support stimulus spending.

Japan’s Nikkei 225 Stock Average briefly surpassed its June intraday peak to reach the highest level since 1990, extending its gains this year to about 28%. The index has been boosted by recent yen weakness, solid company earnings, and corporate governance reforms.

In Argentina, libertarian candidate Javier Milei defeated Economy Minister Sergio Massa to win Sunday’s presidential runoff. A gauge of emerging-market currencies gained along with developing-nation stocks.   – Bloomberg –