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London Shares Lower as Central Bank Meetings and U.S. Inflation Data Awaited

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Shares in the global market experienced a slight decline on Monday, as investors await a busy week filled with central bank meetings and key data releases. Of particular interest is the upcoming data on U.S. inflation, which could have significant implications for market expectations of rate cuts early next year. Despite a positive U.S. payrolls report, which led to a scaling back of expectations for a March rate cut by the Federal Reserve, there is still a 76 percent chance of a rate cut in May.

The Federal Reserve is expected to keep rates steady at 5.25-5.50 percent this week, with market attention shifting to the “dot plots” for rates and Chair Jerome Powell’s press conference. On Tuesday, the consumer price report for November will be released, and analysts are predicting no change to the headline rate and a 0.3 percent increase in the core rate.

John Briggs, the global head of strategy at NatWest Markets, commented on the upcoming reports, stating, “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.” He also added, “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.”

In addition to the Federal Reserve meeting, several other central banks, including the European Central Bank (ECB), Bank of England (BoE), Norges Bank, and the Swiss National Bank (SNB), will also be meeting on Thursday. The Norges Bank is the only one among the group that may consider a rate hike. There is also speculation that the SNB may intervene in the market to weaken the Swiss franc.

Given the high stakes involved, investors are displaying caution, resulting in a slight decline in MSCI’s broadest index of Asia-Pacific shares outside Japan and a minor dip in Europe’s benchmark STOXX index.

Currency markets are closely watching the Bank of Japan’s meeting next week and speculating whether it will signal a step away from its super easy policy. The yen has attracted attention, and the dollar rose to touch 146.28 yen on Monday following a note from analysts at Goldman Sachs suggesting that the Bank of Japan may not make any moves this month, potentially disappointing overseas investors. The dollar also gained against the euro, which has been under pressure due to market expectations of early ECB rate cuts.

In commodity markets, gold prices experienced a decline after the release of the positive jobs report, falling to $1,997 an ounce. However, oil prices saw a slight increase after last week’s 3.9 percent slide to five-month lows. Doubts remain regarding whether all OPEC+ members will adhere to supply cuts, but the market received some support when Washington announced plans to rebuild its strategic oil reserves.

Beyond the financial markets, another significant event being closely watched by investors is the COP28 climate summit. The summit aims to reach a groundbreaking agreement to phase out the use of fossil fuels worldwide.

Overall, with the upcoming central bank meetings and data releases, the global market remains cautious, and investors eagerly await the outcomes to determine the future direction of various financial instruments.

More detail via www.theepochtimes.com here… ( Image via www.theepochtimes.com )

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