Markets were shaken by geopolitical tensions and the US Federal Reserve’s campaign against inflation.
The sell-off, which at one point rivals any of the past two years, was nearly wiped out as buyers emerged at Monday’s close, the latest breathtaking turnaround in markets shaken by geopolitical tensions and the Federal Reserve’s campaign against inflation.
Retail, industrial and energy companies led the S&P 500 to close after closing, after the indicator fell 4% earlier in the day. The dollar rose while 10-year bonds changed slightly.
Traders remain adamant in the expectation that the Fed will continue to increase borrowing costs, even when riskier assets fall. Swap markets show an increase of a quarter point in March and close to a full percentage point for the whole of 2022. Morgan Stanley’s Michael Wilson said the fall in shares in January “coincides well” with his so-called fire and ice story. markets were set to decline amid tighter policies and slowing economic growth. In all, the retreat must continue, as “winter is here” for the shares, he wrote.
“There’s certainly a lot on the table this week, and I think the market behavior and all the risks they face is really testing the strength of the long-term investor,” said Joan Ann Feeney, a partner at Advisors Capital Management, Bloomberg Television on Monday.
Speculators, who removed bullish bets on the dollar at the fastest pace in more than 18 months, are now missing a currency rally ahead of the Fed’s decision on Wednesday. Aggregate net speculative positions vis-à-vis key competitors have fallen the most since June 2020, according to the latest data from the Commodity Futures Trading Commission.
US President Joe Biden was to hold talks with European leaders as Western nations worked to reach a unified position on Russia. The North Atlantic Treaty Organization has said it will step up its deployment in Eastern Europe in a bid to deter a new invasion of Ukraine. Russian President Vladimir Putin has denied planning an attack.
For more market analysis, read our MLIV blog.
What to watch this week:
- The IMF launches an update of the global economic outlook on Tuesday.
- USUS Conf. Consumer Confidence Board on Tuesday.
- A decision on the Fed’s monetary policy on Wednesday.
- EIA report on crude oil inventory on Wednesday.
- Sales of new homes in the US, wholesale inventory on Wednesday.
- South African Reserve interest rate decision on Thursday.
- Initial applications for unemployment in the United States, durable goods, GDP on Thursday.
- Economic confidence in the eurozone, consumer confidence Friday.
- Consumer income in the US, consumer sentiment at the University of Michigan Friday.
Some of the main market movements:
- The S&P 500 rose 0.3% at 4 p.m. in New York
- Nasdaq 100 up 0.5%
- Dow Jones Industrial Average up 0.3%
- The MSCI World Index fell 0.7%
- Bloomberg Dollar Spot Index Increases 0.3%
- The euro fell 0.2% to $ 1.1320
- The British pound fell 0.5% to $ 1.3484
- The Japanese yen fell 0.3% to 113.98 per dollar
- 10-year bond yields slightly changed at 1.76%
- Germany’s 10-year yield fell four basis points to -0.11%
- Britain’s 10-year yield fell four basis points to 1.13%
- West Texas Intermediate crude fell 1.6 percent to $ 83.79 a barrel
- Gold futures rose 0.6% to $ 1,844.40 an ounce