(Bloomberg) — U.S. equity futures advanced ahead of a key week ahead of monetary policy decisions from the Federal Reserve, the European Central Bank and several of their peers.
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Contracts for the S&P 500 and Nasdaq 100 indexes rose 0.3% each, following weekly losses for the major indexes. Treasuries advanced, the 10-year yield fell 4 basis points and the dollar was flat. The Stoxx Europe 600 index fell for the sixth time in seven days. Changed the oil. Best Buy Co. after Goldman Sachs Group Inc. upgraded its stock. It advanced in premarket trading in New York.
Investors are looking for firmer clues on how far and how quickly central banks will tighten monetary policy next as recession fears resurface. The Fed is forecast to slow its hiking frenzy to 50 basis points on Wednesday, although officials have said borrowing costs will remain restrained for some time. Tuesday’s US inflation number will shed more light on whether this is the case or whether markets have a case to expect for rate cuts in late 2023.
“Throughout the year, we have seen the Fed take some seriously aggressive monetary policy measures to control inflation,” Naeem Aslam, senior market analyst at Ava Trade Ltd., said in a note. “However, the latest reading convinced the Fed that inflation is starting to move in the right direction. It means they have to do less because there is more of a tailwind behind it that will continue to push inflation down.”
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Still, a robust labor market and lingering inflation concerns are preventing traders from holding back on the upside. From the resurgence of Covid in China to energy volatility in Europe, differences in the economic outlook between regions of the world are clouding risk sentiment. The dollar was little changed after earlier making small gains.
Following the Fed, the ECB will announce its interest rate decision on Thursday and may opt for a 50 basis point hike. Markets also have to contend with decisions by the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
While this year’s turmoil points to global stocks on track for their biggest annual loss since 2008, the world’s biggest investors predict stocks will see low double-digit gains in 2023. 71% of respondents participated in the Bloomberg News survey. expects the stock to rise against forecasts of a 19% decline. For those who saw gains, the average answer was 10% gain.
Asian stock index fell, ending a two-day winning streak. The rapid spread of Covid cases in China added to concerns, with Hong Kong’s Hang Seng Index falling 2.2%.
Treasuries rose along the curve, with longer-dated securities seeing larger yield declines than shorter ones.
West Texas Intermediate futures were marginally higher. Crude remains on track for its first consecutive quarterly decline since mid-2019 as demand outlook worsens and liquidity fuels price moves towards the end of the year.
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This week’s highlights:
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US CPI, Tuesday
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FOMC interest rate decision and Fed Chairman’s press conference on Wednesday
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Chinese medium-term lending, property investment, retail sales, industrial production, Thursday’s unemployment were examined
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ECB interest rate decision and ECB President Lagarde’s Thursday briefing
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Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
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US cross-border investment, business inventories, manufacturing output, retail sales, initial jobless claims, industrial production, Thursday
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Eurozone S&P Global PMI, CPI, Fri
Some of the major movements in the markets are:
Shares
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S&P 500 futures were up 0.3% as of 8:12 a.m. New York time.
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Nasdaq 100 futures rose 0.3%
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Dow Jones Industrial Average futures rose 0.3%
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The Stoxx Europe 600 fell 0.5%
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The MSCI World index fell 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro increased by 0.2% to $1.0561
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The British pound rose 0.2% to $1.2283
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The Japanese yen fell 0.4% to 137.14 per $1
Cryptocurrencies
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Bitcoin fell 0.8% to $16,978.57
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Ether fell 1.1% to $1,250.58
Bonds
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The yield on the 10-year Treasury note fell four basis points to 3.54%.
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Germany’s 10-year yield fell four basis points to 1.89%.
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Britain’s 10-year yield fell four basis points to 3.14%.
Commodity
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West Texas Intermediate crude oil rose 0.6% to $71.46 a barrel
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Gold futures fell 0.5% to $1,801.20 an ounce
This story was produced with assistance from Bloomberg Automation.
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