(Bloomberg) — Stocks looked set for a steady open Monday at the start of a key week for central bank policy decisions amid elevated inflation and questions about the impact of the omicron virus variant on growth.
Australian shares and U.S. equity futures edged up, while contracts pointed higher for Japan and Hong Kong. The S&P 500 closed at a record high Friday on bets the Federal Reserve can reduce accommodation to curb price pressures without derailing economic reopening.
The Fed on Wednesday is expected to speed up stimulus withdrawal, and perhaps open the door to earlier interest-rate hikes in 2022 if inflation persists near a four-decade peak. At the same time, the U.S. 10-year Treasury yield has fallen below 1.5% and the yield curve is the flattest at the beginning of a tightening cycle in a generation. That suggests investors see limits to how hawkish the Fed can become.
Part of the uncertainty over the outlook stems from mobility restrictions following the omicron flareup. The pound slipped after Prime Minister Boris Johnson warned the U.K. faces a “tidal wave” of infections from the variant. The dollar was steady in early Asian trading.
About 20 central banks are due to hold meetings this week, including the Fed, the European Central Bank and the Bank of England. Those decisions have the potential to stir market swings.
“Global equities had a solid run last week and we’ll see if the goodwill lasts into what is a behemoth when it comes to event risk,” Chris Weston, head of research with Pepperstone Financial Pty Ltd., wrote in a note. Omicron and the Fed should dictate sentiment, he added.
China Prospects
Traders are also monitoring China’s outlook. Economists predict the nation will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for the coming year include counteracting growth pressures and stabilizing the economy.
Geopolitics remain in focus. Foreign ministers from the Group of Seven nations on Sunday warned Russia to de-escalate its activities around Ukraine or face “massive consequences.”
Elsewhere, crude oil advanced. In cryptocurrencies, Bitcoin held above the $50,000 mark.
Bloomberg’s Markets Live team is running a survey on asset views for 2022. It’s anonymous, takes about 2 minutes, and the results will be shared in the latter part of December. To participate, click here.
For more market analysis, read our MLIV blog.
Stocks
- S&P 500 futures rose 0.1% as of 8:29 a.m. in Tokyo. The S&P 500 rose 1% Friday
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 1.1%
- Nikkei 225 futures rose 0.6% earlier
- Australia’s S&P/ASX 200 Index rose 0.3%
- Hang Seng Index futures rose 0.4% earlier
Currencies
- The Japanese yen traded at 113.49 per dollar
- The offshore yuan was at 6.3753 per dollar
- The Bloomberg Dollar Spot Index fell 0.2% Friday
- The euro traded at $1.1319
Bonds
- The yield on 10-year Treasuries declined about two basis points to 1.48% Friday
- Australia’s 10-year bond yield was at 1.63%
Commodities
- West Texas Intermediate crude rose 0.9% to $72.36 a barrel
- Gold was at $1,784.39 an ounce
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