European markets are anticipated to open cautiously on Tuesday as investors turn their attention to pivotal central bank meetings worldwide. This week, 22 central banks, including the U.S. Federal Reserve, the Bank of Japan, and the Bank of England, will unveil their monetary policy decisions.
The Federal Reserve is scheduled to announce its final interest rate adjustment for the year on Wednesday, with expectations leaning towards a third consecutive rate cut. Market watchers will be keenly listening to Fed Chair Powell's comments following the announcement, as these insights will offer a glimpse into where officials project the federal funds rate to land by the end of 2025.
Upcoming reports on U.S. retail sales, industrial production, and Friday's inflation data, measured by Personal Consumption Expenditures, may provide further clarity on the Fed's rate path.
Meanwhile, Japan, the United Kingdom, and Norway are expected to maintain their current interest rates, while economists foresee a consensus 25 basis point rate cut in Sweden.
Asian markets exhibited mixed performances, with declines in the Chinese and Hong Kong indices, despite Chinese Premier Li Qiang encouraging officials in a meeting on Monday to promptly implement essential economic initiatives for the upcoming year.
The dollar remained near a three-week high in Asian trading, while oil and gold saw slight declines.
In the United States, stock indices closed primarily lower, with Treasury yields stabilizing amid expectations of a Fed rate cut and anticipation of interest rate decisions from major global central banks.
In economic developments, a survey indicated U.S. economic output reached its highest point in nearly three years at the close of 2024. The Nasdaq Composite, dominated by technology stocks, surged 1.2 percent to achieve a new record closing high. Conversely, the S&P 500 rose 0.4 percent, while the Dow Jones Industrial Average fell 0.3 percent, marking its eighth consecutive session of losses and its lowest close in nearly a month.
European stocks ended Monday on a downward trend amidst political instability in Germany and France, compounded by Moody's unexpected downgrade of France's credit rating. The pan-European STOXX 600 index slipped 0.1 percent, with Germany's DAX and the U.K.'s FTSE 100 each declining by approximately half a percent, and France's CAC 40 dropping 0.7 percent.
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