Stocks stalled as rate cut hopes face pivotal week
By Wayne Cole and Lawrence White
LONDON (Reuters) -Shares limped lower on Monday in a week packed with a quintet of rich world central bank meetings and data on U.S. inflation that could make or break market hopes for a rapid-fire round of rate cuts early next year.
An upbeat U.S. payrolls report has already seen investors scale back expectations for a March cut by the Federal Reserve, though May remains priced at a 76% chance.
The Fed is considered certain to hold rates at 5.25-5.50% this week, putting the focus on the so-called dot plots for rates and Chair Jerome Powell's press conference.
The consumer price report for November on Tuesday will also influence the outlook, with analysts forecasting an unchanged headline rate and a 0.3% rise in the core.
«We look for another Fed-friendly CPI report but, barring surprises, anticipate the policy statement to signal that economic conditions have not changed enough for officials to drop their tightening bias just yet,» said John Briggs, global head of strategy at NatWest Markets.
«We think Powell will leave the option of a possible hike on the table, but the hurdle seems quite high for the Fed to follow through,» he added. «We also expect the ECB to cut early while the BoE will continue to push back against market pricing of cuts in the first half of 2024.»
The European Central Bank, Bank of England (BoE), Norges Bank and the Swiss National Bank (SNB) all meet on Thursday, with Norway the only one considered a possible hiker. There is also a risk the SNB may toy with renewed intervention to weaken the franc.
With so much riding on the outcomes, investors were understandably cautious and MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.32%, while Europe's
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