Equites Make Careful Start to A Packed Week – Europe Market Wrap

Markets began the week on a cautious note as investors awaited central bank updates on interest rate outlooks and braced for a torrent of results.

On Wall Street, equity futures contracts were steady after the S&P 500 closed out a third week of gains and finished Friday near its record high. Europe’s STOXX 600 index held near the highest level since January 2022, boosted by rallying oil majors as heightened Middle East tensions drove up crude prices. BP, Shell, and Total all gained about 2%.

In intraday trade, Brent and WTI crude reached their highest levels since November, before retreating. The US said Iranian-backed extremists killed three service members and wounded others in a drone assault in Jordan, and Biden pledged to retaliate.

The Middle East developments add to an already crowded calendar of major events for investors, with a Federal Reserve policy decision on Wednesday, one from the Bank of England on Thursday, and US payroll numbers on Friday. There is also a blockbuster earnings line-up, with Apple, Microsoft, and Google parent Alphabet among those due to report.

Money markets fully price in a first ECB rate cut by 25 BPS in April 2024.

ECB’s Centeno: The ECB should start cutting rates sooner rather than later and avoid abrupt moves. There is no need to wait for first-quarter wage data in May to make rate decisions.