(Bloomberg) — Stocks erased an earlier gain on Tuesday as traders prepared for this year’s last central bank meetings later this week. Treasury yields advanced and the dollar was little changed.
Europe’s Stoxx 600 Index was little changed, while U.S. contracts slipped after the S&P 500 slid Monday from a record and the tech-heavy Nasdaq 100 underperformed. MSCI Inc.’s Asia-Pacific share index fell for a third session, with Chinese property and technology stocks struggling.
Traders will be watching the Federal Reserve’s policy decision due Wednesday for clues on the timing of tapering stimulus and raising interest rates. The Fed’s is among 20 central bank meetings this week that could stir market swings. Investors are grappling with the implications of reduced monetary policy support while awaiting more clarity on the economic threats from the omicron virus variant.
“Volatility will remain elevated throughout all of this week’s rate decisions from the Fed, ECB and BOE,” Edward Moya, senior market analyst at Oanda Corp., wrote in a note. “2022 is still expected to be a strong global growth story, but accelerated central bank hawkishness could be the one thing that helps deliver the first major pullback with U.S. equities.”
A hasty policy shift by central banks anxious to tame surging inflation is the biggest downside risk for global stocks next year, according to an informal Bloomberg News survey of fund managers.
Among individual movers, Rentokil Initial Plc, the pest-control company, jumped after agreeing to buy Terminix Global Holdings Inc. to expand in the U.S., the world’s largest market. Tesla shares fell in U.S. premarket trading after Elon Musk offloaded more of his stake in the electric-vehicle maker.
Oil rose as continuing uncertainty over the omicron variant’s impact on demand was countered by an increase in OPEC’s demand forecast for next quarter. European gas prices extended a rally, with tensions between Russia and Ukraine threatening to extend this year’s crunch into next winter.
On the virus front, a two-shot course of Pfizer Inc.’s vaccination may offer 70% protection against being hospitalized with the omicron variant, South Africa’s largest medical-insurance provider Discovery Ltd. said. China reported its first omicron case.
Concerns about Beijing’s crackdown on China’s indebted property sector have flared anew, hurting sentiment. The nation’s real-estate downturn likely sapped economic activity in November.
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 Stoxx Europe 600 was little changed as of 9:54 a.m. London time
- Futures on the S&P 500 fell 0.2%
- Futures on the Nasdaq 100 fell 0.5%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.3%
- The MSCI Emerging Markets Index fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.1298
- The Japanese yen was little changed at 113.60 per dollar
- The offshore yuan rose 0.1% to 6.3681 per dollar
- The British pound was little changed at $1.3220
Bonds
- The yield on 10-year Treasuries advanced one basis point to 1.43%
- Germany’s 10-year yield advanced one basis point to -0.37%
- Britain’s 10-year yield advanced one basis point to 0.71%
Commodities
- Brent crude rose 0.2% to $74.56 a barrel
- Spot gold fell 0.2% to $1,783.44 an ounce
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