US stocks rose at the start of a pivotal week for monetary-policy decisions from the Federal Reserve, European Central Bank and a host of their peers.
(Bloomberg) — US stocks rose at the start of a pivotal week for monetary-policy decisions from the Federal Reserve, European Central Bank and a host of their peers.
The S&P 500 climbed after fluctuating earlier in the session.
Gains in shares of Microsoft Corp., which agreed to buy a 4% stake in London Stock Exchange Group Plc. lifted the index. The Nasdaq 100 wavered. US Treasuries pared gains, with the 10-year yield around 3.57%.
The dollar rose.
All eyes will be on the US consumer price index reading on Tuesday, which is expected to show prices, while still high, are continuing to decelerate. A subdued CPI print would justify the Fed’s projected half-point move on Wednesday and shed light on whether markets can expect rate cuts in late 2023.
While central bank officials have indicted a downshift, they have also emphasized that borrowing costs will need to remain restrictive for some time.
“It’s obviously a meaningful week from a macro prospective and while we’re tempted to suggest the FOMC events will be the highlight, ultimately the core inflation figures will set the tone for trading in US rates for the balance of 2022,” Ben Jeffery and Ian Lyngen of BMO Capital Markets wrote in a note.
Read: The 24 Hours of Hikes That End Year of Fighting Inflation
The S&P 500 posted its best post-CPI day ever in November after the inflation print came in slower than projected.
The US equity benchmark could rise as much as 5.5% on Tuesday — which will tie for the best CPI day ever — should headline inflation come in 0.2 percentage points below estimates on a year-over-year basis, according to an analysis from market maker Optiver.
Still, disparities in the economic outlook between the world’s regions, from the resurgence of Covid in China to energy volatility in Europe, have kept a lid on risk sentiment.
Following the Fed, the ECB will announce its rate decision Thursday, and may also opt for a 50 basis-point hike.
Markets also have to contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
While the tumult of this year has a gauge of global stocks headed for its biggest annual loss since 2008, the world’s biggest investors predict that stocks will see low double-digit gains in 2023.
As many as 71% of respondents in a Bloomberg News survey expect equities to rise, versus 19% forecasting declines. For those seeing gains, the average response was a 10% return.
Key events this week:
- US CPI, Tuesday
- FOMC rate decision and Fed Chair news conference, Wednesday
- China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday
- ECB rate decision and ECB President Lagarde briefing, Thursday
- Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
- US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 10:45 a.m.
New York time
- The Nasdaq 100 fell 0.1%
- The Dow Jones Industrial Average rose 0.6%
- The Stoxx Europe 600 fell 0.7%
- The MSCI World index fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at $1.0544
- The British pound rose 0.2% to $1.2282
- The Japanese yen fell 0.5% to 137.26 per dollar
Cryptocurrencies
- Bitcoin fell 0.6% to $17,018.98
- Ether fell 1.1% to $1,251.17
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.57%
- Germany’s 10-year yield declined two basis points to 1.92%
- Britain’s 10-year yield was little changed at 3.19%
Commodities
- West Texas Intermediate crude rose 3.9% to $73.77 a barrel
- Gold futures fell 0.7% to $1,797.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
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