US futures has started the week in the red with contracts on the Dow Jones futures dropping more than 250 points and the S&P and Nasdaq losing over 1% each. The Dow, S&P 500, and Nasdaq all had gains last week of 1.8%, 2.5%, and 4.3%, respectively, putting them on pace to have the greatest start to a year since 1999. Stock market investors are exercising caution ahead of a crucial Fed policy meeting on January 31 – February 1. Following a 50bps increase in December, the central bank is anticipated to lift the fed funds rate by a lesser 25bps on Wednesday. The market awaits the signal from Powell’s post-conference speech on February1.
A busy week of corporate results is expected, with McDonald’s, General Motors, Apple, Meta, Amazon, and Alphabet among the companies reporting results. Ahead of crucial central bank meetings this week, investors held off on starting new positions, as Britain’s bleak economic outlook continued to dampen risk appetite.
This week will include policy meetings from the Federal Reserve, the European Central Bank, and the Bank of England. After Chief Executive Nigel Wilson announced his resignation after ten years in the position, Legal & General’s stock fell more than 2%. On Monday, the consumer discretionary and financials sectors pulled the blue-chip FTSE 100 lower from record highs to trade around 7,700 points, putting pressure on the London stock market.
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How Asian Markets Closed Today
The Hang Seng tumbled 619.17 points or 2.73% to finish at 22,069.73 on Monday, amid profit-taking after the index closed at over 11 months in the prior session. Concerns over tensions between Beijing and Washington reemerged after the Biden administration reportedly secured a deal with the Netherlands and Japan to restrict exports of some chipmaking machinery to China.
Caution also mounted in a week full of central banks’ meetings that are sure to see borrowing costs rise globally while risks of an outsized hike in the US exist. In China, stocks pared gains ahead of Tuesday’s official PMIs data, as worries lingered that factory activity in the first month of 2023 remained weak due to the impact of long anti-COVID measures. All sectors dragged down the index, with technology stocks being the worst performers. Alibaba Group Hlds. posted steep losses (-7.1%), as did Tencent (-7%), JD.Com (-5.7%), Xiaomi Corp. (-5.9%), Semiconductor Manufacturing (-5.2%), and Li Ning (-4.6%).
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