Investors will focus on Powell’s comments for clues as to when easing could begin
US stocks rose to fresh record highs on Monday as investors braced for earnings updates from tech giants and the Federal Reserve’s rate policy decision. Market participants are nearly certain the central bank will keep rates steady and will focus on Powell’s comments for clues as to when easing could begin. As for earnings, Microsoft and Alphabet will release their results later in the day. The S&P 500 added 0.76%, the Dow Jones gained 0.59%, and the tech-heavy Nasdaq Composite climbed 1.12%.
In Asia, stocks stumbled on Tuesday as the liquidation of China Evergrande weighed on sentiment. Also, investor caution dented risk appetite ahead of the Federal Reserve’s meeting. Hong Kong’s Hang Seng index shed 2.32%, with the Shanghai Composite index down 1.83%. Meanwhile, China’s 10-year government bond yield fell to the lowest in more than twenty years. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%. Japan’s Nikkei 225 was up less than 0.1%, but set for a nearly 8% gain for the month.
European equities were slightly higher at the open on Tuesday, with the overall risk mood tepid for the time being. The pan-European Stoxx 600 rose 0.3% in early deals. US stock index futures were trading slightly lower in early pre-market deals, suggesting month-end flows are affecting market moves at this stage. On the data front, Germany’s fourth quarter GDP came in at -0.3%, as expected while the Italian economy grew at a 0.2% quarterly rate versus 0.0% expected.
In currencies, the US dollar holds steady around 103.50, retaining a modest bullish bias even as US Treasury yields remain under some pressure. The USD index briefly rallied to one-week highs in the 103.80 area during the previous session but failed to extend the ascent as positive risk sentiment attracted selling interest on bullish attempts. The greenback is likely to continue its consolidation in the near term as traders turn more cautious ahead of the Fed meeting. Later in the week, volatility would pick up, and less dovish-than-expected tone from the central bank may push the dollar higher.
