Stock price information displayed in the lobby of the Euronext NV stock exchange in Paris, France, on Wednesday, 14 December 2022. (Photo: Nathan Laine/Bloomberg) Investors are still on the edge after recent remarks from the Fed and other hawkish central banks across the globe. But some may be looking past fears of an economic recession triggered by higher interest rates, and betting instead that inflation might be peaking, allowing the Fed and its peers some leeway in their tightening policy.
“I’m kind of more in the camp of they hike in February, and I do think they’ll hike again in March, but that’s probably it,” Matt Brill, head of US investment grade and senior portfolio manager at Invesco, said on Bloomberg Television. “We’re 90%-95% of the way done here. I think the floor has sort of been set and the worst is certainly behind us.”
But to Dennis DeBusschere, founder of 22V Research, the Fed restating their hawkish rhetoric complicates the near-term backdrop for the S&P 500.
“There is no near-term catalyst to reverse the market trend, but the downside to 3,800 is limited unless a negative catalyst appears,” he said.
Equity investors were also somewhat heartened by a vow from China’s top leaders to boost the economy next year by reviving consumption and supporting the private sector. While news of a Covid surge across China capped Asian market gains, Beijing’s pledge lifted energy and metals prices, with those sectors leading gains on Europe’s Stoxx 600 index.
The dollar was little changed as money markets weighed prospects of slowing US rate hikes, and amped up bets on higher rates elsewhere. The euro strengthened, following a string of hawkish comments from rate-setters.
On commodities, Beijing’s pro-growth pledge and a US move to refill strategic crude reserves boosted oil futures, though economic growth fears kept prices on track for a second monthly loss.
Key events this week:
- China loan prime rates, Tuesday
- Bank of Japan interest rate decision, Tuesday
- US housing starts, Tuesday
- EIA Crude Oil Inventory Report, Wednesday
- US existing home sales, US Conference Board consumer confidence, Wednesday
- US GDP, initial jobless claims, US Conf. Board leading index, Thursday
- US consumer income, new home sales, US durable goods, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.4% as of 9:48 a.m. New York time
- The Nasdaq 100 fell 0.7%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index fell 1.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to $1.0602
- The British pound rose 0.3% to $1.2180
- The Japanese yen was little changed at 136.73 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $16,679.67
- Ether fell 0.2% to $1,179.89
Bonds
- The yield on 10-year Treasuries advanced 10 basis points to 3.58%
- Germany’s 10-year yield advanced six basis points to 2.21%
- Britain’s 10-year yield advanced 13 basis points to 3.46%
Commodities
- West Texas Intermediate crude rose 1.6% to $75.45 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.