LONDON (AFP) – Asian and European stock markets wavered yesterday ahead of a busy week, with the United States (US) Federal Reserve poised to lift interest rates again and some of the world’s biggest companies scheduled to publish their latest earnings reports.
Asian stocks receded, but, after initial losses, markets in Frankfurt, London and Paris logged modest gains and oil prices advanced.
The Fed is widely tipped to hike borrowing costs by 0.75 per centage points tomorrow as it battles soaring inflation.
US second-quarter gross domestic product data are due on Thursday, with some observers warning it could show a second successive contraction – which is considered a technical recession.
Investors are also awaiting the release of earnings from business titans Apple, Amazon and Google parent Alphabet.
“Investors start the week with some trepidation, ahead of the latest Federal Reserve decision and a barrage of corporate earnings,” said head of markets at Interactive Investor Richard Hunter.
“With a packed corporate calendar ahead… indices have been unable to shake off recessionary fears.”
Markets were roiled last week when the European Central Bank (ECB) finally began ramping up interest rates to tackle runaway consumer prices in the eurozone.
The ECB had surprised investors on Thursday with a bigger-than-expected rate increase of 0.5 percentage points.
Consumer prices are soaring worldwide after economies reopened from pandemic lockdowns and as the Ukraine war keeps energy prices elevated.
That, in turn, has sparked aggressive rate hikes from major central banks to try and dampen inflationary pressures.
All three main indices on Wall Street ended last week with a loss, ending a three-day rally, following a big data miss on the crucial US services sector.
Federal Reserve chiefs have already said their main priority was bringing inflation down from four-decade highs, even at the expense of growth.
“We still see further downside for risky assets as recession fears accumulate and central banks remain committed to fighting inflation at the expense of growth,” said Standard Chartered strategist Eric Robertsen.
Others warned that while inflation could begin to ease, the Fed could still push borrowing costs to around five per cent and were unlikely to lower rates as soon as many traders hope.
