LONDON (AFP) – Global stock markets diverged yesterday as traders struggled to maintain momentum from last week’s gains.
Shanghai and Tokyo rose as mainland Chinese markets reopened from holidays, while European indices mostly fell ahead of interest rate decisions by major central banks this week.
The United States Federal Reserve is forecast tomorrow to lift interest rates by just 25 basis points, down from a half-point hike last month, which followed four straight 75-point increases.
The Bank of England (BoE) and the European Central Bank (ECB) will then unveil their latest decisions one day later, with more hikes on the radar.
“Stocks were on the back foot … as attention shifts to this week’s vital Federal Reserve meeting, as well as supporting acts in the shape of ECB and BoE,” said Markets.com analyst Neil Wilson.
Even a strong Wall Street performance was not enough to lift sentiment, after data showed the Fed’s preferred inflation gauge rose in December at its slowest pace in more than a year.
The central bank meetings come as a string of recent data suggests that last year’s monetary tightening campaign by policymakers was beginning to kick in, with price rises beginning to slow from their multi-decade highs.
There remains trepidation on trading floors that economies could still slip into recession, while a mixed earnings season so far has also caused concern about company profits.
In Asia, Shanghai rose as it resumed trading, though it pared big morning gains, while Tokyo was also up.
