Stocks slip when key economic data arrives

  • The euro STOXX fell 0.2%
  • Dollar hits six-week high
  • European and US PMIs are in focus
  • Wall Street is about to open

LONDON/SINGAPORE, Feb 21 (Reuters) – European shares fell on Tuesday ahead of key data that provided a window into the health of major economies, while the dollar hit a six-week high.

The euro zone, Britain, France and the United States are all set to release flash February PMI data, with market players watching for signs of further tightening monetary policy.

In early trade, the euro STOXX 600 (.STOXX) fell 0.2%, while major indices in Germany, France and Britain opened slightly in the red.

The data comes at a key time for stock markets, which have seen a strong start to the post-2022 year, which stalled in February.

“We’re 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 very important.”

Manufacturing activity in the euro zone was seen contracting in February, albeit at the slowest rate in five months. Services activity is projected to expand moderately.

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German business activity returned to growth for the first time in eight months in February, easing supply constraints and improving underlying demand, its data showed.

The MSCI World Stock Index (.MIWD00000PUS), which tracks stocks in 47 countries, fell 0.2%.

U.S. markets were closed on Monday due to the President’s Day holiday and were marginally lower. E-mini futures for the S&P 500 were last down 0.5%.

Earlier, Asian shares also fell, weighed by the prospect of the US Federal Reserve staying on its hawkish path.

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MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) fell 0.9% to 529.97, falling below last week’s six-week low of 529.05.

Japan’s manufacturing activity shrank at its fastest pace in 30 months in February as the world’s third-largest economy faces weakening demand and struggles to contain cost pressures.

The Nikkei (.N225) closed down 0.2%.

Data and dollars

The dollar index, which measures the U.S. currency against six other rivals, was at 104.11, having touched a 6-week high of 104.67 on Friday.

Meanwhile, the euro was down 0.2% at $1.067, ending February after four straight monthly gains.

Investor attention remains firmly on Wednesday’s release of minutes from the central bank’s latest meeting earlier this month, when it raised interest rates by 25 basis points.

The market is now pricing in a hike in US interest rates to 5.30% in July and 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 rose 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 note rose 1.1 basis points to 3.899%, while the two-year U.S. Treasury note, moving in line with interest rate expectations, rose 3.5 basis points to 4.658%.

Oil prices fell as fears that a global economic slowdown would reduce fuel demand prompted investors to take profits from 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 Sri Navaratnam, Himani Sarkar and Christina Finzer

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