Asian shares slipped on Monday and Wall Street futures eked out slight gains amid worries the U.S. Federal Reserve would this week underline its commitment to fighting inflation with whatever rate pain was required.
A major setback that could throw the country into a political deadlock. Trade was choppy with the U.S. on holiday and Nasdaq futures see-sawed through the session to be last up 0.3%, while S&P 500 futures firmed 0.2%. EUROSTOXX 50 futures fell 0.3% and FTSE futures 0.2%. The S&P 500 fell by almost 6% last week to trade 24% below its January high.
Analysts at BofA noted this was the 20th bear market in the past 140 years. And the average peak-to-trough bear decline was 37.3%.
Investors will hope it does not match the average duration of 289 days. Given it would not end until October 2022.
Looming over markets are concerns about major central banks. Which will have to be a tightened aggressively to contain runaway inflation that will tip the world into recession.
Relief seems unlikely this week with UK inflation figures expected to show another alarmingly high reading. This could push the Bank of England into hiking at a faster pace.
The Fed last week vowed its commitment to containing inflation was “unconditional”, while Fed Governor Christopher Waller on Saturday said he would support another hike of 75 basis points in July.
“With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in Q4 is now more likely,” warned analysts at Nomura.