SYDNEY/LONDON, Jan 30 (Reuters) – Rate hikes in Europe and the United States are likely, and U.S. jobs and wages data could impact markets at the start of a week that sets the market agenda. , shares fell on Monday. The latest information on fighting inflation.
Investors expect the Federal Reserve to raise interest rates by 25 basis points on Wednesday and the Bank of England and European Central Bank to raise rates by 0.5 points the day after, so any deviation from that script is a real shock. .
Earnings from the tech giant will also test the mettle of the Wall Street bulls who are pushing the Nasdaq to its best January since 2001.
The European benchmark STOXX index fell 0.5% on Monday morning, reflecting a slight drop in MSCI’s broadest index of Asia-Pacific equities outside of Japan. (.MIAPJ0000PUS)surged 11% in January as far as China’s reopening boosts the economy.
Meanwhile, US stocks are set to follow a nervous Monday mood with S&P 500 and Nasdaq futures down nearly 1% as investors await late-week guidance on Federal Reserve policy. I was.
Analysts are anticipating a hawkish tone that suggests more needs to be done to keep inflation in check. read more
“With the U.S. labor market still tight, core inflation rising and financial conditions easing, Fed Chairman Powell’s tone is hawkish,” said Bruce Kassman, chief economist at JP Morgan. “I would stress that a downward revision to 25 basis points of rate hikes does not mean there will be a moratorium.” , expect another rise in March.
We also expect him to continue to oppose market pricing of rate cuts later this year.”
Given that futures now expect rates to peak at 5% in March and return to 4.5% by the end of the year, there is a lot of work to do.
The dollar index has fallen more than 1.5% for the fourth straight month on growing expectations that the Fed is nearing the end of its rate hike cycle.
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Yields on 10-year bonds have fallen 33 basis points so far this month to 3.50%.
This dovish outlook is also tested by data on US employment figures, the Cost of Employment Index, and various ISM surveys.
EU inflation readings could be important in determining whether the ECB hints at a 0.5 percentage point rate hike in March or the pace of tightening could slow. read more
As for Wall Street’s recent rise, it is heavily dependent on earnings from Apple Inc. (AAPL.O)Amazon.com (AMZN.O)Alphabet Inc. (GOOGL.O) and meta platform (META.O)among many others.
Wedbush analysts wrote, “Apple will get a glimpse into the overall picture of global consumer demand and how China’s supply chain problems are slowly easing.”
“Based on our recent Asian supply chain check, we believe demand for the iPhone 14 Pro is holding up stronger than expected,” they added. We will cut back, but we don’t anticipate massive layoffs.”
Market pricing of early easing by the US Federal Reserve has weighed on the dollar, which has fallen 1.6% so far this month to 101.790 against a basket of major currencies.
The euro rose 1.5% to $1.0878 in January, just below its nine-month high. The dollar fell 1.3% against the yen to $129.27 despite the Bank of Japan’s tenacious defense of its ultra-loose policy.
A lower dollar and lower yields have been a boon for gold, which has so far risen 5.8% over the month to $1,930 an ounce.
Precious metals were flat on Monday ahead of major central bank moves and data releases.
China’s rapid reopening is seen as a windfall for commodities in general, supporting everything from copper to iron ore to oil prices.
Crude oil markets were hesitant over concerns that the Federal Reserve’s rate hike could weigh on fuel demand.
Reporting by Wayne Cole and Lawrence White. Edited by Christopher Cushing and Arun Koyyur
Our criteria: Thomson Reuters Trust Principles.
