Stocks show modest moves as investors await the Federal Reserve’s decision on interest rates. The focus is on possible warnings from Chairman Jerome Powell about market expectations that expectations for policy easing are being overstated.
The S&P 500 and Nasdaq 100 contracts suggest modest gains on Wall Street. In premarket activity, Tesla Inc. sees a 1.4% decline following the recall of more than 2 million vehicles to address Autopilot safety issues. In Europe, the Stoxx 600 index advances slightly, with Inditex SA gaining ground following a positive gross margin forecast.
The pound weakens and UK bonds rise as data reveals a bigger-than-expected economic contraction in October. This sparks further speculation about the Bank of England’s interest rate cuts next year. The dollar and Treasuries see marginal gains.
Globally, attention is on the conclusion of the Federal Reserve’s final policy meeting of 2023. While the central bank is expected to maintain its current stance, recent US inflation data has cast doubt on the likelihood of a more aggressive shift towards policy easing.
“The market disagrees with the Fed on inflation, so I expect some reaction from Powell, but really no game changer,” says Francois Rimeu, strategist at La Francaise Asset Management in Paris.
The S&P 500, which hit its highest level since January 2022 on Tuesday, is up about 10% since the Fed’s last meeting on Nov. 1. Treasury yields have declined on speculation of more than a full percentage point of rate cuts next year.
With the Fed likely to keep its target rate range stable between 5.25% and 5.5%, Powell’s signals on the policy path and updates to quarterly forecasts will be closely scrutinized. The market, which has surpassed the central bank’s current forecasts, may encounter uncertainty based on the Fed’s outlook for rate policy in 2024 and 2025 via its “dot plot.”
Elsewhere, Argentina devalues ​​the peso by 54%, implementing spending cuts as part of President Javier Milei’s shock therapy program to revive the country’s economy. The central bank is now targeting a monthly currency devaluation of 2%.
Oil is trading near the lowest levels since June on signs suggesting supply is outstripping consumption.
In Asia, Chinese stocks are leading a regional sell-off after a leaders’ meeting disappointed investors over a lack of robust economic support measures.
Key events of the week include the US PPI, the Federal Reserve policy meeting, the European Central Bank policy meeting, the Bank of England policy meeting, and the Swiss National Bank policy meeting, among others.
Market movements:
Stocks:
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S&P 500 futures rose 0.1%
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Nasdaq 100 futures rose 0.2%
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Dow Jones Industrial Average futures little changed
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The Stoxx Europe 600 rose 0.2%
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The MSCI World index was little changed
Coins:
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro was little changed at $1.0784
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The pound fell 0.4% to $1.2519.
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The Japanese yen fell 0.2% to 145.68 per dollar
Cryptocurrencies:
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Bitcoin rose 0.2% to $41,172.36
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Ether rose 0.4% to $2,181.28.
Captivity:
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The 10-year Treasury yield fell two basis points to 4.18%.
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The 10-year German bond yield fell three basis points to 2.19%
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The UK 10-year yield fell 10 basis points to 3.87%
Basic products:
Also read: What to expect in December: 3 things that could affect the stock market