- Stocks Fall in Cautious Start to Key Fed Week
- Policy decisions coming for Fed, BOE, BOJ and others
- Equities are coming off their worst week since mid June
Stocks declined in a cautious start on Monday as investors await a slew of interest rate decisions in the days ahead and after global equities notched their worst week since hitting this year’s low in June.
Shares dropped in Hong Kong, Australia and South Korea, along with US stock futures. Trading may be muted by a holiday in Japan and the UK observing a day of mourning for Queen Elizabeth II, with no trading in cash Treasuries during the Asian and European sessions.
The S&P 500 index fell almost 5% last week in its worst performance since June 17 while the rate sensitive 2-year Treasury yield ended at 3.87%. The weakness in markets reflects expectations for an outsized interest rate hike from the Federal Reserve on Wednesday and worries that its aggressive tightening to quell inflation will trigger a recession.
Investors also face potential volatility from policy decisions this week by the Bank of England, the Bank of Japan and a host of other central banks. The British pound sank to its weakest level against the dollar since 1985 on Friday and the yen remains under pressure, though it has backed off from just below the key 145 level versus the dollar. A gauge of the greenback was little changed.
Oil climbed towards $86 per barrel as the Chinese city of Chengdu ended a two-week lockdown, boosting the outlook for demand.
Cryptocurrencies were also weighed by pre-Fed jitters. Bitcoin fell below $19,000 while Ether extended its drop after its blockchain was upgraded last week.