* Global stocks and S&P 500 futures flat
* China skips rate cut as GDP data looms
* Davos begins with focus on geopolitics
* Fed’s Waller and U.S. retail sales ahead
LONDON/SYDNEY, Jan 15 (Reuters) – Global stocks held
steady on Monday, with U.S. markets closed for a holiday, while
Chinese equities fell slightly after the country’s central bank
wrong-footed investors by skipping on a rate cut.
MSCI’s world stock index was unchanged in
morning trading in Europe. It has fallen around 0.35% so far
this year after rallying 20% in 2023.
China’s CSI 300 index fell to its lowest since
2019 but recovered to stand 0.1% lower as investors digested the
central bank’s decision to leave its medium-term policy rate
unchanged on Monday, defying expectations for a cut.
Despite Monday’s sleepy start, investors are in for a busy
week with data on Chinese fourth-quarter growth, UK inflation,
and U.S. retail sales all due on Wednesday.
They will also be listening closely to central bank
officials, especially the Federal Reserve’s Christopher Waller,
whose dovish turn in late November helped send markets soaring
and who speaks on Tuesday.
Europe’s STOXX 600 index was down 0.3% on Monday
after ending the previous week virtually unchanged. Britain’s
FTSE 100 and Germany’s DAX were also 0.3%
lower.
Traders expect around 165 basis points of rate cuts from the
Fed this year, and see an 80% chance of them starting in March,
according to money market pricing.
“The first half of January has shown a dislocation between
rate expectations and data in the U.S.,” said Francesco Pesole,
currency strategist at ING.
“The two most important data points for the Federal Reserve,
labour and CPI inflation figures, both came in hotter than
expected.” Pesole said “strong words from the Fed, perhaps
(from) Powell himself,” might be needed to rein in some of the
heavy rate-cut bets.
Futures for the S&P 500 were down 0.1%, with U.S.
markets shut for Martin Luther King, Jr. Day, meaning Treasury
trading was closed. Germany’s benchmark 10-year bond yield
rose about 4 bps to 2.18% after flatlining last
week.
Japanese stocks continued to shine, with the Nikkei 225
index hitting a new 34-year high above 36,000. The
market has been buoyed by falls in the yen and U.S. bond yields
in recent days.
The focus of world leaders and executives gathering for the
54th World Economic Forum meeting this week in Davos,
Switzerland, will be squarely on global politics.
However, markets showed limited reaction to the victory of
the ruling Democratic Progressive Party in Taiwan over the
weekend, a result which displeased Beijing.
The U.S. Republican Iowa caucus will be run in frigid
weather later on Monday. And fears of a wider Middle East
conflict continued to bubble after the U.S. military on Sunday
said its warplanes shot down a missile fired from Houthi
militant areas of Yemen.
The euro was treading water at $1.095, while the
dollar index held steady at around 102.4.
Oil prices had got some lift from disruptions to shipping in
the Red Sea, though worries about demand this year have limited
the rally.
Brent crude oil was last down 0.1% at $78.20 a
barrel, down from a two-week high of $80.75 on Friday.
(Reporting by Harry Robertson in London and Wayne Cole in
Sydney; Editing by Sonali Paul, Christopher Cushing and Angus
MacSwan)
