Equities Hover Near Highs as Investors Await Fresh Data – Europe Market Wrap

A surge that pushed the S&P 500 close to a record level is losing momentum as investors prepare for a run of US economic reports, beginning with retail sales on Tuesday.

Futures tied to the US benchmark edged slightly higher after a 2.5% gain over the past two days. Gold remained above $5,000 an ounce. In Europe, Kering jumped 11% as early signs of a recovery at its Gucci label emerged. Alphabet launched a bond offering in sterling and Swiss francs after completing a $20 billion sale in the US.

Forecasters expect December retail sales to show continued strength, supported by steady consumer spending despite elevated living costs and a delicate labor market. The figures will be followed by jobs and inflation data later in the week, alongside additional indicators tracking employment conditions.

Markets have entered a quieter stretch after last week’s selloff tied to artificial-intelligence concerns and the rebound that followed. Attention has now turned to whether upcoming data will influence expectations for the Federal Reserve’s future interest-rate decisions.

Government bonds advanced, with the 10-year yield slipping two basis points to 4.18%. The dollar was little changed after declines in the previous two sessions.

Derivatives markets continue to price in two rate cuts in 2026, with the first expected under potential new leadership once Jerome Powell steps down in May. Investors are weighing whether Kevin Warsh would take a firmer stance than other candidates previously considered by President Donald Trump.

In the UK, borrowing costs eased after Keir Starmer strengthened his position as prime minister, reducing the risk of political upheaval. Longer-dated bonds led gains, with the 30-year yield falling three basis points to 5.32% following a sharp rise earlier in the week. Sterling slipped 0.2%.

Japanese stocks extended record highs as optimism grew that increased government spending under Prime Minister Sanae Takaichi will lift corporate profits. Yields on 30-year government bonds fell six basis points to 3.47%.

In China, the yuan climbed to its strongest level since May 2023 after regulators urged banks to curb their holdings of US government debt. The move reinforced a broader shift away from the dollar, potentially speeding up the return of capital into domestic Chinese markets.