NEW YORK/LONDON/SYDNEY, Feb 24 (Reuters) – Wall Street stumbled in early trading on Monday, struggling to extend last week’s rebound, and Treasury yields edged lower. In contrast, European stocks found support in the outcome of the German elections, as investors globally braced for Nvidia’s earnings report.
The euro experienced a positive surge following the conservative victory in Germany’s election, the largest economy within the Eurozone. This upswing in the euro exerted downward pressure on the U.S. dollar.
U.S. equities initially opened with gains, buoyed by futures trading, but subsequently succumbed to the same uncertainties that plagued markets last week. Concerns over economic growth, market valuations, and geopolitical tensions in the U.S. contributed to the S&P 500’s retreat from record highs reached earlier in the previous week.
The S&P 500 was down 0.30%, and the Nasdaq Composite declined by 0.88%. The Dow Jones Industrial Average showed marginal gains.
Recent economic data releases, including weaker retail sales, consumer confidence figures, and disappointing U.S. services Purchasing Managers’ Index (PMI) reports, coupled with higher-than-anticipated consumer price inflation, have collectively eroded market confidence. These factors have ignited concerns among investors about the potential for stagflation.
U.S. markets commenced trading on an optimistic note, mirroring the upward movement of German stocks and the euro. The euro reached a one-month high after the German election results indicated a clear path for centrist parties to form a coalition government.
The euro briefly touched a one-month peak of $1.0528 before retreating slightly to trade at $1.0469, marking a 0.1% decrease.
Germany’s DAX index climbed by 0.16%, while the pan-European STOXX 600 index edged down by 0.33%.
The MSCI world equity index, which tracks shares across 45 countries, fell by 0.38%.
Wall Street was particularly impacted on Friday by a services sector survey that revealed a contraction in activity, adding to existing anxieties regarding tariffs and escalating cost pressures.
The Federal Reserve’s preferred inflation gauge is due on Friday, with expectations of a deceleration to 2.6% from 2.8%. However, any impact may be overshadowed by President Donald Trump’s reliance on tariffs as a tool for economic policy and to exert pressure on trade partners, a strategy that could potentially be inflationary.
The dollar index, which measures the U.S. currency against six major peers, remained slightly below 106.62.
In commodity markets, gold saw a marginal increase of 0.01%, trading at $2,936.37 per ounce, hovering near a record high after eight consecutive weeks of gains.
Oil prices, conversely, have trended downwards, partly fueled by speculation that a potential peace agreement regarding Ukraine could lead to a relaxation of sanctions against Russia, which in turn might boost its fuel exports.
The yield on benchmark 10-year U.S. Treasury notes stood at 4.412%, down 0.8 basis points from late Friday.
(Reporting by Harry Robertson in London and Wayne Cole in Sydney; Editing by Ricardo Figueroa)
