World stocks stagnate as speculators await Fed pause. Soft U.S. economic statistics reinforced concerns the Federal Reserve may not raise interest rates next week, sending European equities mixed on Tuesday.

STOXX is p 0.1% to 460.40 at 0830 GMT. Following a week of gains, the index fell as data showed lackluster U.S. corporate activity. Germany’s DAX (.GDAXI) was unchanged, while London’s FTSE fell 0.3%.
As food prices rose, buyers cut back on non-essential purchases, the British Retail Consortium reported Tuesday.

Tokyo’s Nikkei (.N225) rose 0.90%, but China’s blue-chip index (.CSI300) fell roughly 1%. MSCI’s broadest world stock index (.MIWD00000PUS) was unchanged.

The RBA hiked interest rates and cautioned that more may be needed to bring inflation back to target. Next week, the Fed, the European Central Bank, and the Bank of Japan will make monetary policy decisions following the RBA’s action.
Three months ago, the question was about rate hike speed. But, due to sticky inflation, PineBridge Investments head of multi-asset Mike Kelly expects a pause and further U.S. rate hikes.

“We’re actually still positioned on the notion that you can get a mild U.S. recession without pulling the world into recession,” he said.

Economic indicators and last week’s Fed dovishness have bolstered expectations that the Fed would not raise rates at its June 13-14 meeting.

The CME FedWatch program shows an 82% chance of the Fed staying put, up from 36% a week earlier.

Overnight data revealed the U.S. services sector barely increased in May as new orders slowed, lowering a measure of business input costs to a three-year low, which could help the Fed combat inflation.

Over two-thirds of the U.S. economy is services.

“The index sends another signal that demand is cooling and that the cumulative tightening is working through the economy, giving room for the Fed to pause in June to assess conditions further,” Saxo Markets strategists said to investors.

U.S. non-farm payrolls grew 339,000 in May, but the unemployment rate rose to a seven-month high of 3.7%.

“The tactical risk for equity investors in the very near term is that the Fed indeed skips a meeting and raises rates in July and not June,” said Dalma Capital CIO Gary Dugan.

After Saudi Arabia pledged to cut output, oil prices lost most of their gains. Brent fell 2% to $75.17 and U.S. Crude to $70.58.

The dollar index, which tracks the dollar against six major counterparts, was steady at 104.01, while the euro advanced 0.12% to $1.0725.

Sterling fell 0.2% to $1.2410, while the yen fell 0.10% to 139.44 per dollar.

After the U.S. securities regulator sued Binance, bitcoin fell over 5% overnight to $25,721.