Cautious trend in global markets

Expectations that the Fed will make aggressive interest rate hikes are causing global markets to be 'cautious'. US index futures contracts rose today, while Asian stock markets recouped some of their losses. Recent data from China also played a role in the market movement. Manufacturing activity in the country shrank for the second month due to power outages and increasing cases. The Shanghai stock exchange in China fell 1.2 percent, while Topix in Japan fell 0.4 percent. S&P 500 and Nasdaq 100 index contracts rose. US stock markets fell to their lowest level in a month yesterday as strong data reinforced expectations of more aggressive interest rate hikes. Today, the dollar index fell, and oil is preparing to complete its third month of decline. This will be the longest downtrend in oil in more than 2 years. Angeline Newman of UBS Asset Management said, “What is certain is that it is not easy to predict the outlook for the markets. We are in a world where it is difficult to determine the direction of monetary policy because of mixed economic signals.” Fed officials have made statements that show their commitment to the goal of reducing inflation again. New York Fed President John Williams said that interest rates should remain in a restrictive range until at least 2023. Steve Brice of Standard Chartered Asset Management said in an interview with Bloomberg TV that volatility could continue and that there could be further declines for stocks in the short term. The Bloomberg Dollar Spot Index is down 0.2 percent today. The euro rose 0.2 percent to 1.0037 against the dollar, while the offshore yuan also rose 0.4 percent. The 10-year U.S. bond yield rose 1 basis point to 3.11 percent. The price of a barrel of West Texas Intermediate crude oil increased 0.7 percent, while the price of an ounce of gold is moving sideways around $1,725.10. Eurozone inflation data will be closely monitored today.