Asian stocks rose, with the Nikkei 225 index of the Tokyo stock exchange closing with a gain of 1.33%. Several stock exchanges closed in Asia during Chinese New Year celebrations.
The Shanghai Stock Exchange will be closed for the entire week. The Hong Kong and Singapore stock exchanges were also closed today.
The Sydney Stock Exchange is flat with a change of +0.07%, while the Seoul Kospi rises by 0.63%.
US futures moved little on Wall Street in anticipation of the next meeting of the Fomc, the monetary policy arm of the Fed, which will issue its decision on rates next Wednesday, February 1st. Dow Jones futures were down just 0.03%, while futures on the S&P 500 and the Nasdaq were down 0.08%.
The Dow Industrial Average rose 155 points on Friday (+0.47%) to 33,199.71; the S&P 500 gained 48.24 (+1.24%) to 3,947.01. The Nasdaq posted a gain of 213.41 points (+1.96%) to 11,065.32.
On a weekly basis, the Nasdaq outperformed the market, rising 0.55% and posting a third consecutive week of gains; the Dow Jones lost 2.70%, while the S&P 500 lost 0.66%, interrupting the gains of the last two weeks.
Since the beginning of the year, it is the Nasdaq which is in pole position, with an increase of 6.44%.
“Markets are increasingly betting that high inflation (in the US) is fast turning away from us and that the period of tight monetary policy is about to end,” said Brian Levitt, global market strategist at Invesco. While the economy will likely still face some challenges by mid-year, the market is looking forward to what could prove to be a sustainable recovery.
With regard to the Fed’s next moves, Citi analysts in particular revised downwards their projections on the monetary tightening of the US central bank led by Jerome Powell, scheduled for next Wednesday 1 February, after the two-day meeting of the FOMC, the monetary policy arm of the Federal Reserve.
“We changed our outlook on the February FOMC meeting from a 50 basis point rate hike to +25 basis points, although we believe markets should continue to factor in the likelihood of a higher tightening.”
Citi changed its outlook on rates precisely with the slowdown in inflation growth.
According to data from the CME Group, the markets are pricing in a 99.7% probability of a 25 basis point monetary tightening by the Fed on February 1, which would bring the cost of US money to the new range including between 4.5% and 4.75%.
About 40% of companies listed on the Dow Jones will release their quarterly reports this week. Among the US corporate giants, keep an eye on the balance sheets of Microsoft, IBM, Tesla, Visa and Mastercard.