(Bloomberg) — U.S. futures fell on Tuesday, reversing an earlier gain, as traders prepared for this year’s last central bank meetings later this week. Treasury yields advanced and the dollar slipped.
U.S. contracts extended declines after the S&P 500 slid Monday from a record and the tech-heavy Nasdaq 100 underperformed. Europe’s Stoxx 600 Index was little changed, while MSCI Inc.’s Asia-Pacific share index fell for a third session as Chinese property shares sank to a nearly five-year low.
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. Meanwhile, China’s battered stocks present a buying opportunity, as most of the headwinds facing the country’s economy are now priced in, according to Goldman Sachs Group Inc.
Among individual moves, Tesla shares fell in premarket trading as Elon Musk offloaded more of his stake in the electric-vehicle maker. Apple Inc. gained, bringing it closer to a historic $3 trillion market valuation.
In Europe, Rentokil Initial Plc reversed initial gains to slide as much as 7.9% after the company agreed to buy Terminix Global Holdings for $6.7 billion in stock and cash. BT Group Plc dropped after Patrick Drahi raised his stake in the company and said he won’t make a takeover offer.
Vifor Pharma AG jumped after Australian biotech company CSL Ltd. agreed to buy the Swiss drugmaker for an equity value of $11.7 billion. Ocado Group Plc shares surged after the U.K. company won the the first round in a patent-infringement case filed by rival AutoStore Holdings Ltd.
Oil fluctuated 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, new study data showed Pfizer Inc.’s experimental Covid-19 pill was highly effective at keeping patients out of the hospital, but less adept at erasing milder symptoms often associated with breakthrough infections. Separately, a two-shot course of Pfizer’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.
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
- Futures on the S&P 500 fell 0.1% as of 7:17 a.m. New York time
- Futures on the Nasdaq 100 fell 0.4%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.3% to $1.1316
- The British pound rose 0.2% to $1.3247
- The Japanese yen was little changed at 113.59 per dollar
Bonds
- The yield on 10-year Treasuries advanced two basis points to 1.44%
- Germany’s 10-year yield advanced two basis points to -0.36%
- Britain’s 10-year yield advanced two basis points to 0.72%
Commodities
- West Texas Intermediate crude rose 0.1% to $71.38 a barrel
- Gold futures fell 0.2% to $1,785 an ounce
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