Stocks fluctuated as traders braced for a potentially hawkish message from major central banks meeting this week to set interest rates. Benchmark Brent crude oil topped $95 a barrel for the first time since November, adding to concerns about inflation.
(Bloomberg) — Stocks fluctuated as traders braced for a potentially hawkish message from major central banks meeting this week to set interest rates. Benchmark Brent crude oil topped $95 a barrel for the first time since November, adding to concerns about inflation.
Oil giants TotalEnergies SE, BP Plc and Shell Plc were among the biggest contributors to gains in Europe’s Stoxx 600 benchmark. US equity futures were 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 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.
“While everyone focuses on the immediate impact on headline inflation, it’s worth remembering that rising oil prices are a tax on growth and consumption,” said Charles Diebel, head of fixed income at Mediolanum. “That’s particularly true for Europe, where the issue lies in growth. You have all the ingredients for a recession: the rising rates, inverted yield curves and now higher oil price.”
US Treasury yields edged 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.
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.
“That’s probably too much, given where growth and inflation is for the US,” Joey Chew, head of Asia foreign-exchange research at HSBC Holdings Plc, said about next year’s possible cuts on Bloomberg Television. Investors should expect the dollar to get a boost if the dot plots show less rate cuts projected for next year, she said.
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
- US housing starts, 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:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 9:28 a.m. London time
- S&P 500 futures were little changed
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.1%
- The MSCI Emerging Markets Index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0690
- The Japanese yen was little changed at 147.68 per dollar
- The offshore yuan fell 0.2% to 7.3029 per dollar
- The British pound was little changed at $1.2382
Cryptocurrencies
- Bitcoin rose 0.6% to $26,939.06
- Ether rose 0.1% to $1,640.1
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.31%
- Germany’s 10-year yield declined one basis point to 2.70%
- Britain’s 10-year yield declined four basis points to 4.35%
Commodities
- Brent crude rose 0.6% to $94.98 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott and Tassia Sipahutar.
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