The US stock futures polled higher at the start of a crucial week. The Federal Reserve, the European Central Bank, and several other peers are set to make monetary-policy decisions this week.
Weekly losses for the underlying indexes resulted in contracts on the S&P 500 and Nasdaq 100 indexes being about 0.3% higher. The ten-year yield decreased four bps, while the dollar remained steady as Treasuries advanced. For the 6/7 time, the Stoxx Europe 600 Index tore down.
As recession worries resurface, investors are searching for a more solid indication of how far and fast central banks will withdraw monetary policy. The officials have said that borrowing costs will need to stay tight for some time. Yet the Fed should slow its rate hiking to a 50 bps move on Wednesday. On Tuesday, the US inflation number will provide more insight into whether markets or the government expect rate decreases in late 2023.
Traders remained reluctant to be optimistic due to a strong labor market and persistent inflation concerns. The return of COVID in China and energy volatility in Europe keep a lid on risk sentiment. This is despite disparities in the economic outlook between regions. After a modest gain earlier, the dollar was little changed.
The European Central Bank (ECB) will make its rate decision on Thursday, and it is likely to go up by 50 bps. The Bank of England and monetary authorities in Norway, Mexico, the Philippines, Switzerland, and Taiwan also make decisions that affect markets.
Investors Are Optimistic Over Long-Term
The world’s biggest investors foresee low double-digit gains in 2023. This is despite the turmoil of having a gauge of global stock futures heading for their worst yearly loss since 2008. The average return for those who made money was 10%.
Asia’s equities index fell, ending a two-day winning run. With the Hang Seng Index in Hong Kong down about 2%, the fast spread of COVID cases in China added to the alarm. Longer-dated securities had lower yields than shorter ones. Treasuries rose across the curve.
The price of West Texas Intermediate oil fell 0.9%. The demand outlook has soured, and thin liquidity exacerbates price fluctuations into the year-end. This resulted in the first back-to-back quarterly fall since mid-2019.
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