US futures rise on central bank moves in focus: markets wrap

(Bloomberg) – US stock index futures rose at the start of a crucial week of monetary policy decisions by the Federal Reserve, the European Central Bank and a host of their peers.

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Contracts on the S&P 500 and Nasdaq 100 indices each rose 0.3% after weekly losses for the underlying indices. Treasury bonds advanced with 10-year yields slipping 4 basis points while the dollar held steady. The Stoxx Europe 600 Index slipped for the sixth time in seven days. oil fluctuated. Best Buy Co. was up in premarket New York after Goldman Sachs Group Inc. upgraded its stock.

Investors are looking for more specific clues as to how far and how quickly central banks will tighten monetary policy from now on as recession fears surface. The Fed is forecast to slow its rally to 50 basis points on Wednesday, although officials said borrowing costs will need to remain tight for some time. Tuesday’s US inflation numbers will shed more light on whether that’s the case or whether markets have reason to expect rate cuts in late 2023.

“Throughout the year we have seen the Fed take serious aggressive monetary policy action to control inflation,” wrote Naeem Aslam, chief market analyst at Ava Trade Ltd., in a note. “However, the last reading led the Fed to believe that inflation has started to move in the right direction. That means they have less to do as there is a lot more tailwind behind it that will continue to push inflation lower.”

Read: The 24 hour hikes ending the year of fighting inflation

Still, a resilient labor market and lingering inflation concerns are preventing traders from getting optimistic. Divergent economic prospects across regions of the world, from Covid resurgence in China to energy volatility in Europe, are keeping risk sentiment in check. The dollar was little changed after previously posting a small gain.

After 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 has an indicator that global equities are headed for their biggest annual loss since 2008, the world’s biggest investors are forecasting equities to post low double-digit gains in 2023. As many as 71% of respondents in a Bloomberg News survey expect stock prices to rise, as opposed to 19% predicting falls. For those who saw gains, the average response was a 10% return.

An index of Asian stocks 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 slipping 2.2%.

Government bonds rose across the curve, with longer-dated securities seeing more yield declines than shorter-dated ones.

West Texas Intermediate futures were marginally higher. Crude oil remains on track for its first straight quarterly decline since mid-2019 as demand prospects deteriorate and low liquidity exacerbates price volatility into year-end.

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Important events this week:

  • US CPI, Tuesday

  • FOMC rate decision and Fed Chair press conference, Wednesday

  • China medium-term lending, property investment, retail sales, industrial production, unemployment survey, Thursday

  • ECB interest rate decision and briefing by ECB President Lagarde, Thursday

  • Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan Thursday

  • US Cross Border Investment, Corporate Inventory, Empire Manufacturing, Retail Sales, Initial Jobless Claims, Industrial Production, Thursday

  • Eurozone S&P Global PMI, CPI, Friday

Some of the key movements in the markets:

Stocks

  • Futures on the S&P 500 were up 0.3% at 8:12 a.m. New York time

  • Futures on the Nasdaq 100 up 0.3%

  • Futures on the Dow Jones Industrial Average rose 0.3%

  • The Stoxx Europe 600 fell 0.5%

  • The MSCI World Index fell 0.3%

currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.2% to $1.0561

  • The British pound rose 0.2% to $1.2283

  • The Japanese yen fell 0.4% to 137.14 per dollar

cryptocurrencies

  • Bitcoin fell 0.8% to $16,978.57

  • Ether fell 1.1% to $1,250.58

Bind

  • The 10-year government bond yield fell four basis points to 3.54%

  • The 10-year German government bond yield fell four basis points to 1.89%

  • The 10-year UK government bond yield fell four basis points to 3.14%

raw materials

  • West Texas Intermediate crude rose 0.6% to $71.46 a barrel

  • Gold futures fell 0.5% to $1,801.20 an ounce

This story was created with the support of Bloomberg Automation.

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