Euro STOXX falls 0.2%
Dollar holds near six-week highs
European and U.S. PMIs in focus
Wall Street set to open down
By Tom Wilson and Ankur Banerjee
LONDON/SINGAPORE, Feb 21 (Reuters) – European stocks fell on Tuesday ahead of key data that will offer a window into the health of major economies, while the dollar hovered close to its highest in six weeks.
The euro zone, Britain, France and the United States are all set to publish flash February PMI data, with market players watching for signs of the toll tighter monetary policy has taken on activity.
In early trading, the Euro STOXX 600 fell 0.2%, with major indexes in Germany, France and Britain opening slightly in the red.
The data comes at a key time for equity markets, whose strong start to the year after a bruising 2022 has stalled in February.
“We are at a pivotal moment, where investors are thinking about restarting some positions,” said Francesco Sandrini, head of multi-asset strategies at Amundi. “These numbers are really important.”
Manufacturing activity in the euro zone is seen as shrinking in February, though at a slower rate than in the last five months. Services activity is forecast to have expanded modestly.
German business activity
returned to growth
for the first time in eight months in February thanks to easing supply bottlenecks and improved underlying demand, its data showed.
The MSCI world equity index, which tracks shares in 47 countries, fell 0.2%.
U.S. markets, closed on Monday due to President’s Day holiday, were set for slim losses. E-mini futures for the S&P 500 were last down 0.5%.
Earlier, Asian stocks also slid, weighed down by the prospect of the U.S. Federal Reserve having staying on its hawkish path.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9% to 529.97, falling under six-week lows of 529.05 touched last week.
Kicking off the round of PMIs was Japan, where manufacturing activity shrank at the fastest pace in 30 months in February, as the world’s third-largest economy faces weakening demand and struggling to tame cost pressures.
The Nikkei closed down 0.2% lower.
DATA AND THE DOLLAR
The dollar index, which measures the U.S. currency against six other rivals, was last at 104.11, just below a six-week high of 104.67 touched on Friday.
Meanwhile, the euro was down 0.2% to $1.067, and is set to snap four straight months of gains and end February lower.
Investor focus is also firmly on the release on Wednesday of the minutes of the Fed’s latest meeting earlier this month when it raised interest rates by 25 basis points.
The market is now pricing U.S. interest rates to peak at 5.30% in July and remain above 5% by the end of the year, moving away from expectations of deeper rate cuts this year.
The yield on 10-year Treasury notes was up 2.3 basis points to 3.852%., after touching a three-month high of 3.929% on Friday.
The yield on the 30-year Treasury bond was up 1.1 basis points to 3.899%, while that of the two-year U.S. Treasury paper, which typically moves in step with interest rate expectations, was up 3.5 basis points at 4.658%.
Oil prices fell as fears that a global economic slowdown would reduce fuel demand prompted investors to take profits on the previous day’s gains. Brent crude was last down 66 cents, or 0.8%, at $83.41 a barrel.
(Reporting by Tom Wilson in London and Ankur Banerjee in Singapore; Editing by Shri Navaratnam, Himani Sarkar and Christina Fincher)