Global stocks struggled to hold on to gains as traders braced for this week’s burst of central bank decisions. Benchmark Brent crude oil topped $95 a barrel for the first time since November, adding to concerns about inflation.
(Bloomberg) — Global stocks struggled to hold on to gains as traders braced for this week’s burst of central bank decisions. Benchmark Brent crude oil topped $95 a barrel for the first time since November, adding to concerns about inflation.
Oil majors TotalEnergies SE, BP Plc and Shell Plc were among the outperformers as Europe’s Stoxx 600 index surrendered an earlier advance, while US equity futures drifted toward being little changed.
Crude has soared by about a third since mid-June as Saudi Arabia and Russia joined hands to curb supplies and drive a rebound in prices. That move has sustained the pressure on central bankers as they seek to cool inflation, while managing risks to their economies. The Federal Reserve sets policy Wednesday, the Bank of England Thursday and the Bank of Japan Friday.
“Central banks have done a rather good job so far, but there’s little room for manoeuvre now,” said David Kalfon, chief executive officer of Sanso Investment Solutions. “They made clear since the start of the cycle that beating inflation is the key, not growth.”
US Treasury yields ticked higher, while a gauge of dollar strength slipped.
The prospect of rates staying higher for longer has drained some of the enthusiasm toward tech shares, after they led the rally in US stocks earlier this year. Flows suggest investors are positioning for more losses in the Nasdaq 100, according to Citigroup Inc. strategists.
Nasdaq futures continued to attract bearish flows last week, leaving positioning heavier on short bets rather than long, the team led by Chris Montagu said. That suggests “few investors are comfortable taking a bullish view on the possibility of a near-term reversal for the growth/tech related index,” they wrote in a note dated Sept. 18. The Nasdaq 100 is down about 3.9% from a peak on July 18.
In individual stock moves Tuesday, Dell Technologies Inc. rose in US premarket trading after Daiwa Securities upgraded the computer company to outperform on improved demand trends. Coinbase Global Inc. and Marathon Digital Holdings Inc. were among cryptocurrency-related stocks heading higher as the price of Bitcoin climbed above $27,000.
With the Fed forecast to keep interest rates on hold this week, traders will be focused on the so-called dot plot summary of economic forecasts. The two main questions are whether policymakers will retain their projections for one more 25 basis-point hike by year-end, and how much easing they are penciling in for 2024. In June, they projected one percentage point of cuts.
“The Fed is likely to highlight that in its collective view the fight against inflation has not yet been won and that the FOMC will be highly data-dependent in terms of future rate decisions, leaving the door open for a possible rate hike later in the year,” said Richard Flax, chief investment officer at European digital wealth manager Moneyfarm. “If the Fed sounds a more hawkish tone, we could see a continuation of the higher-for-longer trend that we’ve seen recently, with lower probability of significant rate cuts in 2024.”
Key events this week:
- This week, Ukrainian President Volodymyr Zelenskiy is expected to meet with Joe Biden at the White House, attend United Nations General Assembly in New York
- OECD releases interim economic outlook report on the global economy, Tuesday
- Eurozone CPI (August final), Tuesday
- Bloomberg Future of Finance Conference in Frankfurt, with speakers to include German Finance Minister Christian Lindner, Tuesday
- Japan trade, Wednesday
- China loan prime rates, Wednesday
- UK CPI, Wednesday
- Federal Reserve policy meeting followed by Fed Chair Jerome Powell’s news conference, Wednesday
- Bank of Canada issues summary of September’s policy meeting, Wednesday
- Eurozone consumer confidence, Thursday
- Bank of England policy meeting, Thursday
- US leading index, initial jobless claims, existing home sales, Thursday
- China’s Bund Summit, Friday
- Japan CPI, PMIs, Friday
- Bank of Japan rate decision, Friday
- Eurozone S&P Global Eurozone PMIs, Friday
- US S&P Global Manufacturing PMI, Friday
Some of the main moves in markets:
- S&P 500 futures were little changed as of 8:31 a.m. New York time
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0710
- The British pound rose 0.3% to $1.2417
- The Japanese yen was little changed at 147.74 per dollar
- Bitcoin rose 1.9% to $27,270.94
- Ether rose 0.7% to $1,649.8
- The yield on 10-year Treasuries advanced four basis points to 4.34%
- Germany’s 10-year yield advanced three basis points to 2.74%
- Britain’s 10-year yield declined two basis points to 4.38%
- West Texas Intermediate crude rose 1.3% to $92.68 a barrel
- Gold futures rose 0.3% to $1,958.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar.
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