U.S. stocks tumbled on Monday, as investors looked ahead to a busy week of central bank meetings in which policymakers were poised to take a look at high inflation rates in major economies. key economy.
Wall Street’s benchmark S&P 500 stock index fell 0.7% in early New York trading, after closing at a record high in the previous session. The tech-heavy Nasdaq index fell 0.8%.
In Europe, the region’s Stoxx 600 index fell 0.4%, while London’s FTSE 100 fell 0.8% and Germany’s Dax was flat. In Asia, Hong Kong’s Hang Seng fell 0.2 percent and Tokyo’s Nikkei 225 gained 0.7 percent.
In the bond market, the yield on the 10-year US Treasury note fell 0.06 percentage points to 1.42% as the price of the benchmark debt instrument rose. The German 10-year yield was unchanged at 0.38%.
The muted performance comes ahead of three highly anticipated central bank meetings this week. The US Federal Reserve, the European Central Bank and the Bank of England are all ready to make policy announcements.
A report last week showed consumer price grew 6.8% in November from a year ago – the fastest annual rate in nearly 40 years.
Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note that the Fed is expected to announce Wednesday that it will “reduce” its bond purchases at a “faster pace” “. That would set the stage for the US central bank to start raising interest rates to curb inflation.
“Investors have already priced in three Fed hikes in 2022, the first of which will take place in June,” the note said. “Therefore, there will be a more hawkish message from the Fed this week to hurt market sentiment.”
Investors are grappling with near-daily updates on the effectiveness of a vaccine against the Omicron coronavirus variant, the newest of them – released by the UK’s Health Security Agency on Friday – shows that booster shots can be up to 75% effective in combating symptomatic infection from the new strain of bacteria.
That coincides with the appearance of “Reassurance” data from South Africa, with Harsha Somaroo, president of the country’s Public Health Association, suggesting that vaccination plus immunity built from a previous infection provides a degree of protection against severe symptoms. important.
The winter resurgence of Covid-19 further complicates matters for the European Central Bank’s executive body, which is due to meet later this week amid growing pressure in the European Union. monetary stimulus reduction. Rising energy prices and supply chain bottlenecks have pushed eurozone inflation to record 4.9 percent in November, well above the ECB’s 2% target.
“It was the perfect storm [in terms of] Frederik Ducrozet, global macro strategist at Pictet, said. “The difficulty for the ECB is that it doesn’t want to overreact” to factors beyond its control, such as supply chain problems that have helped fuel inflation.
Meanwhile, the UK’s Bank of England is meeting on Thursday, with markets pricing in a one-third chance of a rate hike from 0.1% to 0.25%.
In currencies, the dollar index – which tracks the greenback’s performance against six other currencies – was up 0.2%. Sterling fell 0.3%.
