(Bloomberg) — Markets around the globe prepared for a wave of central bank decisions, with traders weighing the resilience of the economy to less generous monetary settings and coronavirus challenges.
The S&P 500 dropped from a record, led by losses in retail, energy and financial shares. Apple Inc. whipsawed, with the iPhone maker trading near a $3 trillion market value for the first time ever. Treasury 10-year yields slipped below 1.45%, while the dollar rose. Bitcoin sank as the rout in the world’s largest cryptocurrency deepened.
About 20 central banks are due to hold meetings this week, with the Federal Reserve seen winding down bond purchases and signaling an interest-rate liftoff in 2022 — heralding a historic pivot to counter the fastest inflation since the 1980s. The European Central Bank, the Bank of England and the Bank of Japan are also due to announce their monetary policy decisions in the next few days.
Comments:
- “We think the Fed’s pivot to a more aggressive tapering schedule poses a larger risk for asset prices than most investors believe. Good news, supply is improving, but will it arrive at the wrong time?”, wrote Morgan Stanley strategists including Mike Wilson.
- “As long as the Fed doesn’t provide a materially hawkish surprise this Wednesday (something that’s possible, but unlikely), stocks can rally into year-end on momentum, even if valuations are again stretched,” wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter.
- “We do not expect the Fed to slam on the brakes to choke off liquidity, but rather look for it to “pump the brakes” as lightly as it can as it takes the mechanisms of emergency stimulus off gradually,” wrote John Stoltzfus, chief investment strategist at Oppenheimer.
Read: Omicron Variant Dents Vaccine Protection in Oxford Study
Corporate highlights:
- Bristol Myers Squibb Co. said it will raise its dividend and buy back up to $15 billion in shares as the U.S. drugmaker’s cash flow appears strong over the next two years.
- Pfizer Inc. agreed to buy Arena Pharmaceuticals Inc. in a deal valued at about $6.7 billion, gaining potential therapies targeting immuno-inflammatory diseases.
- Harley-Davidson Inc. plans to separate its electric motorcycle unit as a publicly traded operation by merging it with a blank-check company.
- Peloton Interactive Inc. put out an ad Sunday in a measure of damage control, responding to a scene in the new show “And Just Like That…” where a character dies using a product of the home-exercise firm.
Here are some key events this week:
- Euro zone industrial production, Tuesday.
- U.S. PPI, Tuesday.
- China releases November industrial output, retail sales data, Wednesday.
- Fed rate decision, Wednesday.
- U.S. business inventories, retail sales, empire manufacturing, Wednesday.
- BOE rate decision, Thursday.
- ECB rate decision, Thursday.
- U.S. housing starts, initial jobless claims, industrial production, Thursday.
- BOJ monetary policy decision, Friday.
- S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
- “Quadruple witching” day in the U.S. market, when options and futures on indexes and equities expire, Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.5% as of 10:51 a.m. New York time
- The Nasdaq 100 fell 0.6%
- The Dow Jones Industrial Average fell 0.8%
- The Stoxx Europe 600 fell 0.3%
- The MSCI World index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.1277
- The British pound fell 0.2% to $1.3240
- The Japanese yen was little changed at 113.53 per dollar
Bonds
- The yield on 10-year Treasuries declined five basis points to 1.44%
- Germany’s 10-year yield declined three basis points to -0.38%
- Britain’s 10-year yield declined four basis points to 0.71%
Commodities
- West Texas Intermediate crude rose 0.2% to $71.82 a barrel
- Gold futures rose 0.2% to $1,788.10 an ounce
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