LONDON/SINGAPORE, April 8 (Reuters) – Global shares were little changed on Monday as oil prices retreated from a six-month peak, while U.S. bond yields hit their highest since late November as investors continued to rein in bets on Federal Reserve interest rate cuts.
Europe’s STOXX 600 index, opens new tab was 0.24% higher in early trading after falling 1.2% the previous week, with Germany’s DAX , opens new tab up 0.54% after better-than-expected industrial data lifted the mood.
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U.S. S&P 500 futures were flat after the index fell 0.95% last week. Nasdaq futures, opens new tab were also unchanged.
Stock markets have made a rocky start to the second quarter as the risk of a broader conflict in the Middle East has pushed up oil prices. Strong U.S. economic data has also added to investor concerns about how much central banks will be able to lower borrowing costs.
Oil prices fell on Monday, however, as geopolitical tensions eased somewhat after Israel withdrew more soldiers from southern Gaza. Talks on a truce began on Sunday and continued on Monday although a Hamas official said no progress had been made, despite Egyptian sources saying headway had been achieved.
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Brent crude was last down 0.9% at $90.33 a barrel, after hitting a six-month high of $91.91 last week, when factors including a suspected Israeli attack on Iran’s embassy in Syria added to upward pressure.
“The price remains elevated overall though and together with tighter supply globally, there isn’t an immediate catalyst for the price to loosen,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
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A much stronger-than-expected U.S. jobs report on Friday, which followed solid manufacturing data at the start of the week, caused investors to cut their bets on a June rate cut from the Fed.
Market pricing on Monday showed traders see a roughly 48% chance of a cut in June, down from around 59% a week ago.
The likelihood of rates staying higher for longer pushed 10-year U.S. Treasury yields to their highest since late November on Monday at 4.458%, up 8 basis points.
“The resilience of the U.S. labour market is calling the June cut into question,” said Mohit Kumar, chief Europe economist at Jefferies.
“While one should not attach too much importance to one payroll report… if the data remains robust we will have to rethink our June call.”
Investor focus this week will be on the U.S. consumer price index (CPI) report on Wednesday, which is expected to show core inflation, which strips out volatile energy and food prices, slowing to 3.7% in March from 3.8% the prior month.
If inflation data in the next two months show a downward trend, the Fed may still be open to a rate cut in June, said Vasu Menon, managing director of investment strategy at OCBC Bank in Singapore.
The European Central Bank sets interest rates on Thursday, with investors looking for a green light from officials that rate cuts will start in June after inflation slowed more than expected to 2.4% in March.
The U.S. dollar index was little changed at 104.37. But Japan’s yen remained under pressure, with the dollar up 0.2% and not far off its highest since 1994 at 151.91 yen, keeping traders on alert for possible intervention by Japanese authorities.
China mainland stocks trading resumed after extended holidays from Thursday, with the blue-chip gauge 0.88% lower. Hong Kong’s Hang Seng Index , opens new tab rose 0.07% while Japan’s Nikkei 225, opens new tab climbed 0.91%
Spot gold hit a new record high at $2,353.80 an ounce, and was last up 0.4%.
