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STOXX Europe 600 down 0.5%
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Lanxess profit warning hits chemicals
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German producer price growth slows
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U.S. stock futures lower
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CITI: "CAN THE BULLISH MOMENTUM CONTINUE?"
The momentum across Wall Street was strong once again last week, bringing positioning to its most extended since 2010 based on available data, according to Citi's latest weekly note that looks at flows across futures markets and ETFs.
As a result, the risk of profit taking has grown.
"The key now is whether bullish momentum can continue... or if rounds of profit taking and hedging will slow the market in the weeks to come," Citi analysts including Chris Montagu write.
Average profits on long positions currently stand at 4% for the S&P and at 6.8% for Nasdaq, according to the U.S. bank.
“Reprinted with permission of Citi Research. Not to be reproduced.”
(Danilo Masoni)
STOXX ON THE BACKFOOT (0754 GMT)
The STOXX 600 is down 0.1%, deepening this week's losses as China growth fears weigh on sentiment against a tense backdrop of sticky inflation in Europe.
Utilities is faring best among sectors by far, up 0.7%, followed in second place by healthcare, up 0.4%.
Germany's chemical company Lanxess is the biggest loser of the wider index, down 14.8%, and weighing wider chemicals falling 1.6% and the worst off sector.
Any moves upwards are subdued, with the biggest riser being Nkt, up 2.7%.
In the UK, Ocado shares are down 3.9% after some broker price target cuts.
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STILL SEEKING DECISIVE STIMULUS IN CHINA (0632 GMT)
A look at the day ahead in European and global markets from Sonali Desai
Disappointment has been the prevailing sentiment so far this week as investors grow impatient with the wait for more decisive Chinese stimulus measures. Events in Asia only added to the mood on Tuesday.
China delivered the expected 10 basis-point reduction to its lending benchmarks, but disappointed those looking for a bigger cut to the mortgage-linked five-year loan prime rate. Chinese property stocks took a hit and the yuan came under further pressure, reversing much of its bounce against the U.S. dollar late last week when stimulus expectations were driving price action.
The Reserve Bank of Australia's June 6 meeting minutes showed its surprise decision to raise interest rates had been "finely balanced", sending the Aussie dollar down 0.70% as markets scaled back expectations of a follow-up hike in July.
Still, that helped Australian shares build on recent gains to reach a seven-week high, bucking declines across Asian bourses where rising Treasury yields and souring anticipation of Chinese stimulus efforts spurred broad declines.
While more positive signals from U.S. Secretary of State Antony Blinken's long-overdue visit to China sparked some hope of an improvement in ties, any warming in trade relations is likely to remain a hard sell in Congress.
The wary investor mood is likely to spill into Europe, where the data calendar is confined to German producer prices for May. Comments from policymakers are likely to attract greater interest, with European Central Bank Vice-President Luis de Guindos, Bank of Spain Governor Pablo Hernandez de Cos and Bank of Finland Governor Olli Rehn all scheduled to speak, and a rate cut is expected in Hungary.
Key developments that could influence markets on Tuesday:
German producer prices
Hungary rate decision
ECB bank supervisor Elizabeth McCaul and Vice President Luis de Guindos speak
Federal Reserve St Louis President James Bullard speaks at the Barcelona School of Economics
(Sonali Desai)
EUROPE HEADS FOR SECOND DAY OF LOSSES (0622 GMT)
European shares are gearing up for a soft start according to futures, which are down around 0.2%-0.3% across the board.
Eurostoxx futures and FTSE futures are down about 0.2%, while Germany's DAX futures are off 0.3%, as are U.S CME e-mini S&P 500 futures.
It would mark a second day of losses, after major European indices enjoyed their biggest weekly gain in two months last week. On Monday, the STOXX 600 lost 1%.
China cut its key lending benchmarks on Tuesday as expected, which weighed on Asian shares. Flagging Chinese growth remains on traders' minds, with four major Western banks having cut their 2023 GDP forecasts for China after May data.
Over in the UK, focus is on elevated mortgage rates ahead of key inflation data due on Wednesday and the Bank of England's policy meeting on Thursday.
In company news, UK fashion retailer Next has raised its sales and profit guidance after warmer weather and a wages boost for consumers supported trading. UBS is facing hundreds of millions of dollarsin penalties over Credit Suisse's mishandling of Archegos Capital, after UK, Swiss and U.S. regulators completed their investigations, according to a report in the FT on Monday.
(Lucy Raitano)
