(Bloomberg) — European stocks and U.S. futures rose on Monday as traders prepared for a wave of central bank decisions this week amid concerns about economic risks from the omicron virus variant.
Miners led an advance in Europe’s Stoxx 600 Index as the price of iron ore jumped on expectations that China will move to increase stimulus next year. U.S. shares closed at a record on Friday after an inflation print that was high, but in line with predictions.
The Federal Reserve on Wednesday is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. The 10-year U.S. Treasury yield was little changed at 1.48% and the dollar pushed higher.
Traders are paring back bets that the Bank of England will raise rates next year as concerns over fresh Covid restrictions outweigh inflation fears. The pound retreated after Prime Minister Boris Johnson warned the U.K. is facing a “tidal wave” of omicron infections and set an end-of-year deadline for the country’s booster vaccination program. The country’s health secretary said there’s no certainty the government will be able to keep schools open.
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, as traders evaluate the resilience of global reopening to less generous monetary settings and coronavirus challenges.
“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.
In Turkey, the lira fell below 14 per dollar, hitting new lows, after S&P Global Ratings lowered the outlook on the nation’s sovereign credit rating to negative. The country is determined not to raise interest rates, its new finance minister said on Monday, echoing President Recep Tayyip Erdogan’s policy that has put pressure on central bank decision-making.
MSCI Inc.’s Asia-Pacific share gauge slipped, reversing an earlier climb. A wave of selling swept through Chinese developers’ bonds and shares after the sudden plunge in a major property firm’s notes renewed concern over the health of the sector.
China’s top decision makers last week signaled policies may become more supportive of growth next year. Economists predict China will start adding fiscal stimulus in early 2022.
Elsewhere, an affiliate of Binance, the world’s biggest cryptocurrency exchange, withdrew its application for a license to run a digital-token exchange in Singapore.
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.
Here are some key events this week:
- The U.S. Federal Open Market Committee starts its two-day policy meeting. Tuesday
- China releases November industrial output, retail sales data. Wednesday
- FOMC rate decision and Powell news conference. Wednesday
- Rate decisions from Indonesia, Philippines, Mexico, Bank of England, European Central Bank (Christine Lagarde briefing), Norway, Switzerland, Taiwan, Turkey. Thursday
- Markit manufacturing PMI: Eurozone, France, Germany, U.K., Australia. Thursday
- Rate decisions from Colombia, Japan, Russia. Friday
For more market analysis, read our MLIV blog.
Stocks
- The Stoxx Europe 600 rose 0.6% as of 9:46 a.m. London time
- Futures on the S&P 500 rose 0.3%
- Futures on the Nasdaq 100 rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The MSCI Asia Pacific Index fell 0.7%
- The MSCI Emerging Markets Index fell 0.7%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.4% to $1.1267
- The Japanese yen fell 0.2% to 113.69 per dollar
- The offshore yuan rose 0.1% to 6.3693 per dollar
- The British pound fell 0.2% to $1.3240
Bonds
- The yield on 10-year Treasuries was little changed at 1.48%
- Germany’s 10-year yield declined one basis point to -0.36%
- Britain’s 10-year yield declined two basis points to 0.72%
Commodities
- Brent crude rose 0.6% to $75.61 a barrel
- Spot gold was little changed
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