# German gloom dampens stocks as Fed, ECB meetings beckon Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-28 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: German Gloom Dampens Stocks as Fed, ECB Meetings Beckon Meta Description: German gloom and sliding yen impact tech gains as central bank meetings loom, with concerns over potential rate hikes. URL: https://financedigest.com/german-gloom-dampens-stocks-as-fed-ecb-meetings-beckonhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-28t021651z1lynxmpej3r02drtroptp4global-markets-1736814092936-compressed.jpg) # German gloom dampens stocks as Fed, ECB meetings beckon By Huw Jones LONDON (Reuters) – A stagnant German economy and sliding yen overshadowed buoyant tech earnings to send shares lower on Friday, with investors betting that next week’s batch of central bank meetings will point towards a levelling off in interest rates. Oil headed for a second week of declines after data on Thursday showing the U.S. [economy slowing more than expected](https://www.financedigest.com/global-fuel-injector-cleaner-market-emerging-economies-expected-to-influence-growth-until-2031.html "Global Fuel Injector Cleaner Market: Emerging Economies Expected to Influence Growth until 2031") in the first quarter. The Japanese yen fell to a nine-year low against the euro after the Bank of Japan left its ultra-easy monetary policy unchanged. The dollar headed for a second straight [monthly loss](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss"). [Muted global shares were underpinned by Thursday’s tech-led rally on Wall Street](https://www.financedigest.com/wall-street-muted-on-jobs-growth-as-inflation-delta-fears-weigh.html "Wall Street muted on jobs growth as inflation, Delta fears weigh"), when a strong quarterly report from Facebook parent Meta Platforms Inc overshadowed concerns over slowing U.S. [economic growth](https://www.financedigest.com/economic-growth-risks-jolt-inflation-obsessed-markets.html "Economic growth risks jolt inflation-obsessed markets"). The MSCI All Country stock index eased, but remains up more than 7% so far this year. The STOXX index of European companies eased 0.36% after data showed the [German economy](https://www.financedigest.com/german-economy-skirts-recession-but-just-for-now.html "German economy skirts recession, but just for now") stagnated in the first quarter. The flash preliminary euro zone GDP growth figure for the first quarter is due at 0900 GMT, ahead of next week’s [European Central Bank](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans") meeting. The International Monetary Fund called on the ECB to keep [raising interest rates](https://www.financedigest.com/bank-of-england-raises-rates-in-8-1-vote.html "Bank of England raises rates in 8-1 vote") until the middle of 2024 to rein in inflation. Investors hope [next week’s](https://www.financedigest.com/hungary-cenbank-seen-hiking-100-bps-to-11-75-next-week-as-inflation-surges.html "Hungary cenbank seen hiking 100 bps to 11.75% next week as inflation surges") ECB and Fed meetings will confirm that rates are peaking. You have got this thinking that [central banks](https://www.financedigest.com/analysis-powerful-swiss-central-bank-faces-reform-calls-in-wake-of-credit-suisse-rescue.html "Analysis-Powerful Swiss central bank faces reform calls in wake of Credit Suisse rescue") probably have one more hike in them and perhaps we will then see a plateau or potentially rate cuts,” said Mike Hewson, chief markets strategist at CMC Markets. I [think we will see a plateau but they won’t come down quickly, and I don’t think the penny has dropped on that in markets.”](https://www.financedigest.com/maximising-the-opportunities-available-from-marketing-technology-and-innovation-focused-thinking.html "Maximising the opportunities available from marketing technology and innovation focused thinking") Patrick Spencer, vice chair of equities at RW Baird, said the Fed is likely to raise [interest rates](https://www.financedigest.com/london-stocks-slip-ahead-of-key-interest-rate-decisions.html "London stocks slip ahead of key interest rate decisions") by 25 basis points, though it could be postponed for a month due to concerns about regional banks. “You do have concerns about the U.S. debt ceiling, which worries me more than the regional banks because all the [major](https://www.financedigest.com/banks-oil-majors-lift-british-shares-higher.html "Banks, oil majors lift British shares higher") regional banks have reported and they have all said credit quality is fine,” Spencer said. Futures are saying interest rates will be lower than Fed [Funds by year end](https://www.financedigest.com/hedge-funds-set-to-end-2021-with-inflows-for-first-time-in-three-years.html "Hedge funds set to end 2021 with inflows for first time in three years"), indicating a decline. I think certainly they will pause.” S&P 500 stock index futures were down 0.3% after Amazon.com Inc signalled its cloud [growth would slow](https://www.financedigest.com/china-nov-export-growth-slows-but-imports-accelerate.html "China Nov export growth slows but imports accelerate") further as its business customers braced for turbulence and clamped down on spending. ![](https://www.globalbankingandfinance.com/wp-content/uploads/2023/04/Big-Tech-share-of-SP500-market-cap.jpg) ## BANK OF JAPAN REVIEW The [Bank of Japan kept its loose monetary settings unchanged but revamped its guidance on the future](https://www.financedigest.com/what-is-the-future-of-banking-in-the-metaverse.html "What is the future of banking in the metaverse?") path of policy, and announced a “broad-perspective” review with a planned time frame of around one to one-and-a-half years. In its first meeting under new governor Kazuo Ueda, the central [bank modified its forward guidance by removing a pledge to keep interest rates at “current or lower](https://www.financedigest.com/banks-miners-lead-ftse-100-lower.html "Banks, miners lead FTSE 100 lower") levels. Japan’s Nikkei jumped 1.4% while the [yen initially weakened before turning 1% higher against the dollar](https://www.financedigest.com/aussie-dollar-firm-as-bonds-tumble-yen-looks-past-boj.html "Aussie dollar firm as bonds tumble, yen looks past BOJ"), and Japanese government bonds rallied. There’s still a major consensus call that shorting the [dollar to buy the yen](https://www.financedigest.com/resilient-u-s-dollar-soars-to-24-year-high-vs-yen-37-year-peak-vs-sterling.html "Resilient U.S. dollar soars to 24-year high vs yen, 37-year peak vs sterling") will be the big move of the year, but we’re looking for the catalyst, which would be a signal from the BoJ it is ready to tighten policy,” said Simon Harvey, head of FX analysis at Monex Europe. Harvey said that [signal could come](https://www.financedigest.com/stocks-shed-gains-treasury-yields-jump-as-fed-signals-rate-hikes-could-come-soon.html "Stocks shed gains, Treasury yields jump as Fed signals rate hikes could come ‘soon’") in June. China shares gained 0.70%, while [Hong Kong’s](https://www.financedigest.com/ubs-gives-hong-kong-staff-covid-quarantine-cash-memo.html "UBS gives Hong Kong staff COVID quarantine cash -memo") Hang Seng index was 0.3% higher. Geopolitical tensions along with [worries over the global](https://www.financedigest.com/global-stock-markets-slip-on-inflation-tax-regulation-worries.html "Global stock markets slip on inflation, tax, regulation worries") economic outlook have crimped investor sentiment in recent weeks. [Markets are pricing in an 85% chance of the Fed raising](https://www.financedigest.com/cosmetic-procedures-market-to-raise-at-a-cagr-of-7-5-over-the-forecast-period-2017-2025.html "Cosmetic Procedures Market To Raise At A CAGR Of 7.5% Over The Forecast Period 2017-2025") interest rates by 25 basis points at its meeting next week, the CME FedWatch tool showed. [Traders expect the hike](https://www.financedigest.com/traders-ramp-up-bets-on-75-basis-point-ecb-sept-hike-bond-yields-jump.html "Traders ramp up bets on 75 basis-point ECB Sept hike, bond yields jump") to be the last in the U.S. [central bank’s](https://www.financedigest.com/central-banks-ease-off-on-rate-hike-push-in-october.html "Central banks ease off on rate hike push in October") fastest monetary policy tightening cycle since the 1980s. The [yield on 10-year Treasury](https://www.financedigest.com/stocks-hit-record-u-s-treasury-yields-hover-above-5-month-lows.html "Stocks hit record; U.S. Treasury yields hover above 5-month lows") notes eased to 3.45%, after clocking their biggest intraday gain since March on Thursday as investors weighed the looming debt ceiling showdown in Washington. The [yield on the 30-year Treasury bond](https://www.financedigest.com/sovereign-bond-yields-not-yet-reached-a-summit-reuters-poll.html "Sovereign bond yields not yet reached a summit – Reuters poll") eased to 3.696%. The dollar index, which measures the currency against six rivals, was 0.532% higher, with the euro down 0.4% to $1.098 \[.FRX/\] U.S. crude eased 0.16% to $74.65 per barrel and Brent was trading at $78.42, flat on the day. \[O/R\] (Reporting by Ankur Banerjee and Huw Jones, additional reporting by Naomi Rovnick; Editing by Shri Navaratnam, Raju Gopalakrishnan and John Stonestreet) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---