Global Markets Await Central Bank Moves Amid Mixed Economic Signals

Wall Street appeared set for a positive start Monday, as global equities hovered at four-week lows amid uncertainty over U.S. and global economic growth. European stocks and bond yields fluctuated ahead of key central bank decisions. Key data and geopolitical events are poised to influence market movements this week.

Wall Street prepared for an optimistic opening on Monday, as global equities lingered at their lowest in four weeks, fueled by conflicting signals on U.S. and global economic growth.

European stock markets posted a gain of approximately 0.7%, with the CAC 40 slightly outperforming at an 0.8% increase. The focus in Europe this week will be the European Central Bank's rate decision on Thursday.

According to Victor Balfour, investment strategist at Rothschild & Co., the primary focus in the coming weeks will be the health of the U.S. economy. Despite mixed data, the labor market does not show signs of rapid deterioration.

Investors remain cautious regarding the Federal Reserve's next move, especially after recent comments from Fed officials. Market speculation hovers around a 30% chance of a significant rate cut, though Barclays economist Christian Keller notes no strong inclination from the Fed for aggressive easing.

Anticipated U.S. consumer price data might further clarify the case for rate cuts, with headline inflation expected to decrease slightly. Meanwhile, political dynamics will intensify with the upcoming debate between Kamala Harris and Donald Trump.

Bond yields, which had been falling, saw a rebound on Monday. French bonds underperformed slightly due to a potential budget submission delay. Both U.S. 10-year and two-year Treasury yields also rose.

Globally, China's inflation rate hit a six-month high, adding to concerns of its struggling economy, while Japan's Nikkei faced a decline in tech stocks. In the energy sector, oil prices firmed up after last week's significant drop, aided by weather-related concerns in the U.S. Gulf Coast.

(With inputs from agencies.)