(Bloomberg) – Major currencies fluctuated and stocks were poised to open lower in Asia at the start of a pivotal week for markets, with interest rate decisions due from the Federal Reserve, the European Central Bank and a host of their peers.
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The dollar was little changed against the yen and the euro in early trading. Equity futures indicated likely declines ahead for Australian, Japanese and Chinese stocks.
A fall in U.S. stocks late Friday shattered the calm that prevailed for most of the trading session, with the S&P 500 closing near the day’s lows. The Dow Jones Industrial Average posted its worst weekly decline since September.
Yields on government bonds in Australia and New Zealand rose on Monday, following moves in the US on Friday, when 10-year Treasury yields climbed to near 3.6%.
Recession fears resurfaced ahead of the Fed’s decision on Wednesday, when policymakers are expected to downgrade to a 50 basis point hike. Yet officials including Chairman Jerome Powell have also stressed that borrowing costs will need to remain restrictive for some time, putting them at odds with some investors looking for rate cuts later in 2023.
The ECB will follow on Thursday, with consensus estimates that it will also hike by 50 basis points. Markets also face decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan this week.
Read: The 24-hour hike that ends a year of battling inflation
While this year’s tumult has a gauge of global equities heading for its biggest annual loss since 2008, the world’s biggest investors are predicting stocks will see low double-digit gains in 2023. Seventy-one percent of Respondents to a Bloomberg News survey expect stocks to rise, compared to 19% expecting declines. For those seeing gains, the average response was a 10% return.
The world’s top fund managers are also overwhelmingly bullish on Chinese equities for 2023. Around 60% of respondents to a Bloomberg News survey recommended buying the country’s stocks, while 31% said it was a sale.
More immediately this week though, all eyes will be on Tuesday’s US consumer inflation data ahead of the Fed meeting. Prices, although far too high, are expected to continue to slow.
Key events this week:
US CPI, Tuesday
FOMC Rate Decision and Fed Chair Press Conference Wednesday
Medium-term loans in China, real estate investment, retail sales, industrial production, jobless survey, Thursday
ECB rate decision and briefing from ECB President Lagarde, Thursday
Tariff decisions for UK BOE, Mexico, Norway, Philippines, Switzerland and Taiwan, Thursday
U.S. cross-border investment, trading stocks, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
Eurozone S&P Global PMI, CPI, Friday
Some of the major moves in the markets as of 6:52 a.m. Tokyo time:
The S&P 500 fell 0.7% while the Nasdaq 100 fell 0.6% on Friday
Nikkei 225 futures fell 0.4%
Australian S&P/ASX 200 index futures fell 0.5%
Hang Seng index futures fell 1.2%
The euro was little changed at $1.0532
The Japanese yen was little changed at 136.53 per dollar
The offshore yuan was little changed at 6.9674 to the dollar
Bitcoin was little changed at $17,122.88
Ether fell 0.2% to $1,266.26
West Texas Intermediate crude fell 0.6% to $71.02 a barrel on Friday
Spot gold rose 0.5% to $1,797.32 an ounce on Friday
–With the help of Rita Nazareth.
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