Fed’s latest rate decision ahead

Major central banks set to signal interest rate glide path

The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans to raise interest rates in March as it focuses on fighting inflation in Washington, January 26, 2022.

Joshua Roberts | Reuters

The U.S. Federal ReserveEuropean Central Bank and Bank of England are all expected to hike interest rates once again this week, as they make their first policy announcements of 2023.

Economists will be watching policymakers’ rhetoric closely for clues on the path of future rate hikes this year, as the three major central banks try to engineer a soft landing for their respective economies without allowing inflation to regain momentum.

The market is pricing in a 25 basis points hike from the Fed on Wednesday, but the key question is what the Federal Open Market Committee will indicate about further rate hikes in 2023.

Meanwhile 50 basis point hikes are expected from the ECB and BOE on Thursday.

Read the full story here.

— Elliott Smith

Stocks on the move: Husqvarna up 6.2%, QinetiQ down 4.2%

Swedish outdoor machinery seller Husqvarna was the top riser after the open, up 6.2%, despite reporting a higher operating loss for the fourth quarter. Adjusted for items including a restructuring the loss narrowed, however.

At the bottom of the Stoxx 600 index, U.K. defense firm QinetiQ shed 4.2%.

Germany reinsurer Hannover Rueck was down a similar amount after reporting higher full-year results that were in line with its previous forecast.

— Jenni Reid

European markets open higher as investors prepare for next Fed hike

Europe’s Stoxx 600 rose 0.3% in early trade, with travel stocks up 0.9% and financial services up 0.8%.

The U.K.’s FTSE 100 gained 0.25%, France’s CAC 40 was up 0.17% and Germany’s DAX rose 0.1%.

The start-of-year rally has stuttered, but European markets still managed to climb 6.72% through January.

Wednesday will be dominated by the Federal Reserve’s monetary policy announcement, where a 25 basis point increase is expected, as well as hints about its future path and assessment of the U.S. economy.

— Jenni Reid

CNBC Pro: What Wall Street is expecting from Shell, TotalEnergies and BP earnings

European markets: Here are the opening calls

European markets are heading for a higher open Wednesday as investors focus on the U.S. Federal Reserve’s latest monetary policy announcement today.

The U.K.’s FTSE 100 index is expected to open 10 points higher at 7,781, Germany’s DAX 30 points higher at 15,154, France’s CAC up 10 points at 7,096 and Italy’s FTSE MIB up 75 points at 26,721, according to data from IG.

Earnings come from Vodafone, GSK and Novartis. The main data release in Europe Wednesday is flash inflation figures from the euro zone for January.

— Holly Ellyatt

China’s factory activity contracts again

China’s factory activity in January signaled a further contraction from previous readings, albeit at a slower pace, marking the sixth monthly contraction in a row.

The Caixin manufacturing Purchasing Managers’ Index for January came in at 49.2 on Wednesday, a slightly higher reading than December’s 49.0 but still missing Reuters’ expectations of 49.5

“Both manufacturing supply and demand continued to shrink last month. Fallout from the pandemic was a drag on production and sales,” Caixin reported in the press release.

—Lee Ying Shan

CNBC Pro: This electric vehicle ETF soared 20% in January

Read More:Fed’s latest rate decision ahead

2023-02-01 09:33:00

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