Trading was muted overnight while markets await the latest views from central banks. The US Federal Reserve, the Bank of Japan and the Bank of England headline a cattle call of central banks due to deliver interest rate decisions this week. While no adjustments to interest rates are expected, the messaging around inflation and the future course of interest rates is crucial to all asset classes.
Bond markets reversed the previous day’s rally in a fine tuning ahead of these market shaping announcements. Equity markets took a pro-growth stance, lifting technology stocks, but broad market measures edged lower. The S&P 500 index hit an all-time high for the third day in a row, before dropping to close just in the red, although most European bourses closed modestly higher.
Perhaps more concerning is pressure on industrial commodities. Crude oil fell, ostensibly on demand fears generated by the halting of vaccine distribution in Europe. Copper shed 2% in London trading, and iron ore fell as steel prices came under pressure,
Once again currency markets were largely unchanged. The US dollar is weaker against most currencies, but still appreciating against the Japanese yen, indicating little desire for safe haven. Both Bitcoin and spot gold prices were steady to bid.
Share market futures finished the overnight session lower in Japan and Australia, and higher in Hong Kong and mainland China. New Zealand balance of payments data released this morning dropped in line with forecast. The impact of Japanese data today and US housing and building starts tonight could be dulled by the central bank statements to come.