Sydney, Dec. 12 (BNA): Asian stocks fell while the dollar drifted higher at the start of a hectic week, as markets await a flurry of interest rate decisions from the US Federal Reserve, European Central Bank and others.
According to Reuters, MSCI’s broadest index of Asia-Pacific stocks outside Japan (. .
Japan’s Nikkei (.N225) declined 0.3%. S&P 500 futures were down 0.2% and Nasdaq futures were down 0.3%.
In China, blue-chip shares (.CSI300) fell 0.5%, while Hong Kong’s Hang Seng Index (.HSI) fell 1%, as investors focused on the rapid wave of COVID-19 infections disrupting the economy.
Wall Street fell on Friday, Treasury yields advanced and the dollar pared earlier losses.
Tuesday’s US Consumer Price Index (CPI) report will set the tone for the markets for the week. Economists expect annual core inflation to ease to 6.1% in November, compared to a rise of 6.3% in the previous month.
The risk could be to the upside, after data on Friday showed producer prices rose faster than expected, sparking fears that the CPI report could signal that inflation is flat and interest rates may have to stay higher for longer.
This week, markets can go anywhere. Hotter CPI – say 6.4% (and above) and a hawkish set of points from the Fed and Powell’s statement could see funds call it a day for 2022 – bleed risk into 2023 and buy funds Chris Weston, Head of Research at Pepperstone, said:
“It would be a big surprise if we don’t see the Fed back down to a 50bp increase… We also want to understand if Jay Powell opens the door to a slowdown to a 25bp rate hike from February – again, while in line with rates Market, it can be considered that we are nearing the end of the hiking cycle which is modest negative for the US dollar.”
The Federal Reserve is widely expected to raise interest rates by 50 basis points on Wednesday at its final meeting of 2022, though the central bank’s updated economic outlook and Fed Chair Jerome Powell’s press conference are also in focus.
Kevin Cummins, chief US economist at NatWest, said any surprise in the CPI report is unlikely to deter the Fed from raising interest rates by 50 basis points, though it will play a larger role in the policy statement and tone of Powell’s press conference. .
“As is so often the case, updated point charts and estimates of final (peak) interest rates will be more important to the policy outlook than near-term action this week — a topic Powell will focus on in his prepared remarks and press conference.”
In addition to the Fed, the European Central Bank and the Bank of England are also set to announce interest rate hikes, as policymakers continue to put curbs on growth to curb inflation.
In the currency markets, the US dollar drifted up 0.1% against a basket of currencies to 105.17, although it wasn’t too far from its five-month low of 104.1 a week ago.
The British pound fell 0.35% to $1.222, while the Australian dollar fell 0.5% to $0.6759.
Treasury yields remained largely flat on Monday. The yield on the benchmark 10-year Treasury note held at 3.5820%, compared to its US close of 3.5670%. The two-year yield touched 4.3527%, up slightly from its US close of 4.330%.
In the oil market, prices rose after falling on Friday to their lowest level this year due to fears of a global recession.
US West Texas Intermediate crude futures rose 0.9% to $71.71 a barrel, while Brent crude settled at $76.64 a barrel, up 0.7%.
Spot gold fell 0.3% to $1,790.38 an ounce.
FAE