Stocks Fall, Firms in Dollars Before Central Bank Flood

NEW YORK, Dec. 13 (Reuters) – Global stock markets edged down and the dollar strengthened on Monday as markets awaited news of a series of central bank meetings this week, which may include the US Federal Reserve signaling the end of his stimulus to buy bonds.

Just after 11am ET / 1600 GMT, the Dow Jones Industrial Average (.DJI) lost 292.04 points, or 0.81%, to 35,678.95, the S&P 500 (.SPX) lost 28.97 points, or 0.61%, to 4,683.05 and the Nasdaq Composite (.IXIC) lost 110.78 points, or 0.71%, to 15,519.82.

The pan-European STOXX 600 index (.STOXX) lost 0.25% and the MSCI gauge of equities around the world (.MIWD00000PUS) lost 0.62%.

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Omicron remains a concern, with UK Prime Minister Boris Johnson warning of a “tidal wave” of new cases of the coronavirus variant, weighing on the FTSE index (.FTSE) and the pound sterling. Read more

Still, with markets relying on vaccines to limit economic fallout, the dollar was broadly strong ahead of the two-day Federal Reserve meeting on Tuesday.

The US central bank is expected to signal a faster decline in asset purchases, and therefore an earlier onset of interest rate hikes. It will also update the rate outlook over the next two years.

The dollar rose slightly ahead of upcoming meetings, with investors watching how quickly the Fed will stop buying bonds and looking for clues as to when it will start raising rates in 2022.

“Almost everyone expects the pace of reduction to pick up and end at the end (of the first quarter of next year),” BannockBurn analysts wrote in a note to investors.

The European Central Bank, the Bank of England and the Bank of Japan are also meeting this week. All are moving towards a policy of normalization at their own, often icy pace.

“If the Fed increases the cut from $ 15 billion to something like $ 30 billion, they could be finished by March, which would allow them to look to raise rates after that,” said April LaRusse, official. Fixed Income Investment Specialists at Insight Investment.

China’s blue-chip CSI300 Index (.CSI300) closed 0.6% higher, after hitting its highest level in nearly five months in hopes of more stimulus as key executives in the countries have pledged to prioritize economic stability in 2022. read more

The Turkish lira was the day’s big loser, collapsing as much as 7% to an all-time high as the prospect of another interest rate cut this week loomed.

Emerging market equities lost 0.56%. The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) closed 0.51% lower, while Japan’s Nikkei (.N225) rose 0.71%.

The US Treasury market has taken the risk of earlier Fed hikes with confidence, perhaps considering lower long-term inflation and a lower peak for the policy rate.

At 1.48%, 10-year Treasury yields remain well below this year’s peak of 1.776%.

US and European bond yields were lower on Monday.

The ECB, meeting on Thursday, is expected to confirm that its € 1.85 trillion ($ 2.09 trillion) emergency pandemic stimulus package will end next March. Read more

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Expectations of a rate hike at Thursday’s Bank of England meeting have been revised down as Omicron worries about the near-term economic outlook.

CLOSED DOLLAR

The dollar index was about 0.25% firmer at 96.329. The greenback gained a fifth of a percent to 113.63 yen, while the euro slipped 0.25% to $ 1.1283.

The pound has managed to regain some ground after falling on the government’s latest Omicron warnings. Prime Minister Boris Johnson has said the UK’s first patient has died after contracting the Omicron variant.

The British pound was last traded at $ 1.3247, down 0.17% on the day.

US crude recently fell 0.61% to $ 71.23 a barrel and Brent was at $ 74.67, down 0.64% on the day.

The Turkish lira fell to a record low of nearly 15 per dollar amid concerns over President Tayyip Erdogan’s risky new economic policies and the prospect of another rate cut at the central bank meeting of Thursday. Read more

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Chronology of the Lira December 2021

Reporting by Dhara Ranasinghe and Elizabeth Dilts Marshall; Editing by Dan Grebler

Our Standards: Thomson Reuters Trust Principles.

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