Stocks Fall in Cautious Performance on Key Sustainment Week: Markets Reversal

Stocks Fall in Cautious Performance on Key Sustainment Week: Markets Reversal

(Bloomberg) — Stocks and U.S. equity futures slipped cautiously on Monday as investors awaited several interest rate decisions in the coming days and after global equities posted their worst week since hitting year lows this in June.

Futures on the S&P 500 index fell 1% along with the Nasdaq 100, marking extended declines for the benchmark after its steepest weekly decline since June 17. rally.

The weakness in the markets reflects expectations of a huge interest rate hike from the Federal Reserve on Wednesday and worries that the aggressive tightening will encourage inflation to moderate.

Investors also face potential volatility from policy decisions this week by the Bank of England, the Bank of Japan and several other central banks. The British pound went to the weakest level against the dollar since 1985 on Friday and the yen is still under pressure, although it is supported from just below the key 145 level against the dollar. A measure of the green back rose.

“The aggressive policy tightening in the next 4-6 months, not only in the US but globally, increases the risk of a recession next year,” said Maria Landeborn, senior strategist at Danske Bank A/S. “We expect uncertainty around inflation, rates and the overall economy to remain high, which is negative for market sentiment and risk assets.”

The decline in global stocks widened after warmer-than-expected inflation data prompted traders to take out bets for rate hikes. Swaps continue to price in a 75 basis point rise when the Fed meets – with some bets leaning towards a full point.

Top Wall Street strategists see increased risks to US earnings and equity valuations. Morgan Stanley’s Michael J. Wilson and Goldman Sachs Group Inc.’s David J. Kostin said. both that progress is being made on profitability, emphasizing tighter monetary policy and pressure on company margins.

Read more: See Wall Street Strategies Building Pressure for US Earnings

Traders briefly priced the Fed’s key policy rate at a peak of 4.5% in March last week as the central bank stepped up its efforts to keep inflation under control. The full percentage point increase was the peak expected since the Fed’s last policy meeting in July.

Activity was muted by a holiday in Japan and the United Kingdom observing a day of mourning for Queen Elizabeth II, with no trading in cash during the Asian and European sessions.

Pre-fed bits also weigh cryptocurrencies. Bitcoin fell below $19,000 and Ether increased its decline after its blockchain was upgraded last week.

In pre-market US trading, major tech stocks including Apple Inc. fell. and Microsoft Corp.

Some key events this week:

  • World Bank President David Malpass speaking in New York, Monday.

  • The Vice President of the European Central Bank Luis de Guindos speaks in Madrid, Monday

  • China’s prime lending rates, Tuesday.

  • The Swedish interest rate was decided on Tuesday.

  • Federal Reserve interest rate decision, Wednesday.

  • Major Bank CEOs including Jamie Dimon of JPMorgan Chase and Co. and Brian Moynihan of Bank of America Corp. testimony before the US House Financial Services Committee, Wednesday.

  • Reserve Bank of Australia Deputy Governor Michele Bullock speaks at a Bloomberg event in Sydney on Wednesday.

  • Central bank policy meetings in Japan, the United Kingdom, Indonesia, South Africa, Turkey and Switzerland, Thursday.

  • US Treasury Secretary Janet Yellen speaks in Washington, Thursday.

  • Eurozone PMI, Friday.

Some of the main moves in the markets:

Stock

  • S&P 500 futures fell 1% as of 6:05 New York time

  • Nasdaq 100 futures fell 1.1%

  • Futures on the Dow Jones Industrial Average fell 1%

  • The Stoxx Europe 600 fell 1%

  • The MSCI World index fell 0.4%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.4%

  • The euro fell 0.4% to $0.9976

  • The British pound fell 0.5% to $1.1360

  • The Japanese yen fell 0.4% to 143.47 per dollar

Bonds

Commodities

  • West Texas Intermediate crude fell 1.9% to $83.53 a barrel

  • Gold futures fell 0.7% to $1,672.20 an ounce

More stories like this are available on bloomberg.com

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published.