The pace of interest rate hikes remains uncertain, making investors nervous
After flipping between modest gains and losses, US stock markets finished mixed on Monday as investors turned more cautious ahead of this week’s major events including Fed meeting, GDP second-quarter figures and fresh corporate earnings. The central bank is expected to raise borrowing costs by 75 basis points, but the pace of hikes remains uncertain, making investors nervous. The S&P 500 added 0.1%, the Dow Jones Industrial Average climbed 0.3%, while the tech-heavy Nasdaq Composite slid 0.4%.
Asian equities finished mostly higher on Tuesday. The Shanghai Composite Index rose 0.8% while the Hang Seng in Hong Kong gained 1.8%. The Nikkei 225 in Tokyo shed 0.16% as the he dovish Bank of Japan (BOJ) minutes has failed to support the Japanese equities. The central bank confirmed its commitment to its ultra-loose monetary policy, as expected. In individual stocks, shares of Alibaba Group rallied over 5,5% after the world’s biggest e-commerce company announced plans to change the status of its Hong Kong-traded shares to make them more accessible to mainland Chinese buyers.
In Europe, stocks stay cautious on Tuesday, with the pan-European Stoxx 600 hovering around the flatline in early deals ahead of fresh quarterly earnings and the Federal Reserve’s policy decision. Adding to worries in the region, Gazprom said supplies through the Nord Stream 1 pipeline to Germany would drop to just 20% of capacity as it needed to halt the operation of a Siemens gas turbine. Elsewhere, UBS missed expectations for the second quarter of 2022 as it saw falling client activity on the back of the global market downturn.
Meanwhile, the USD index looks directionless on Tuesday, flirting with the 106.50 zone in early European deals. As risk sentiment has deteriorated somehow in recent trading, the safe-haven greenback could refrain from a deeper retreat for the time being. EURUSD holds marginally above 1.0200 today, struggling to overcome the 1.0260-1.0280 local resistance that has been capping recovery attempts since last week.
