A look at the day ahead in European and global markets |
|
|
By Stella Qiu, Correspondent |
|
|
A small pullback in oil prices was apparently all it took to get markets back in the risk-on party mood. Japan's Nikkei jumped more than 2% and South Korea surged almost 4%, so maybe investors reckon oil will steady around $100 a barrel and they can live with that. As long as they don't drive, fly or eat out... It is a brave trade that will be tested when the Federal Reserve delivers its policy decision and, just as importantly, its updated "dot plot" projections. |
|
|
Fed to deliver reality check |
The exterior of the Federal Reserve Board building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger/File Photo |
The Fed meeting is shaping up to be a reality check for markets that have done their best to look past the war in the Middle East. While policymakers are widely expected to keep interest rates in the range of 3.5% to 3.75%, the key question is whether surging global oil prices are more of a threat to inflation or a brake on economic growth, or even worse, a recipe for stagflation. Which leads to the "dot plots" and whether the median maintains a rate cut this year and next, or drops them altogether. The assumption is that cuts will stay, but it could be a close call. A hawkish tilt would be a rude awakening for stocks and bonds, and could lift the dollar further. |
Graphics are produced by Reuters |
|
|
Powell's plans and Bank of Canada |
Fed Chair Jerome Powell will explain the decision in his press conference and may divulge whether he intends to remain on the board as a governor when he steps down as chair in May. The Bank of Canada also meets later on Wednesday and no policy change is expected. With inflation slowing to 1.8% in February and labour market being weak, it would likely talk of cutting if times were normal. Markets, however, are still wagering the next move will be up, with one hike fully priced in by year-end. In Asia, oil prices fell after the Iraqi government and Kurdish authorities reached a deal to resume oil exports via Turkey's Ceyhan port. Brent crude futures dropped 2.4% to $100.97 a barrel. S&P 500 futures rose 0.4% and Nasdaq futures gained 0.5% as investors counted down to the Fed's meeting and earnings from chipmaker Micron Technology where a blockbuster result is hoped for. Reports that Nvidia was aiming to resume shipments to China also helped underpin AI sentiment. |
|
|
Key developments that could influence markets on Wednesday: |
- Federal Reserve policy meeting
- U.S. data on PPI, durable goods
- Bank of Canada policy meeting
- Micron Technology earnings
|
|
|
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. |
|
|
| | | | | Morning Bid is sent every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here. Want to stop receiving this email? Unsubscribe here. To manage which newsletters you're signed up for, click here. This email includes limited tracking for Reuters to understand whether you’ve engaged with its contents. For more information on how we process your personal information and your rights, please see our Privacy Statement. Terms & Conditions | | | | | © 2026 Thomson Reuters. All rights reserved.
3 Times Square, New York, NY 10036 | | | |
|
|
|
No comments:
Post a Comment