(Bloomberg) — Global stocks rebounded on Wednesday as investors awaited the Federal Reserve’s final policy decision of the year.
Most Read from Bloomberg
Futures contracts for the S&P 500 and Nasdaq 100 advanced 0.2% after both gauges retreated on Tuesday. The Stoxx 600 was set for its first day of gains in five sessions. Asian equities kept steady, snapping a three-day losing streak.
Subscribe to the Bloomberg Daybreak podcast on Apple, Spotify or anywhere you listen.
Commerzbank AG rose after UniCredit SpA said it has boosted its stake in the German lender. In Japan, shares of Nissan Motor Co. jumped the most since at least 1974 on news that the ailing carmaker is exploring a possible merger with Honda Motor Co. Renault SA, Nissan’s biggest shareholder, rose as much as 7.4% in Paris.
While a quarter-point Fed interest-rate cut is almost fully priced in for Wednesday, investors will focus on the outlook for 2025 as inflation decelerates more slowly than anticipated and the economy remains resilient. The possible impact of key policies under the incoming administration of President-elect Donald Trump adds to the uncertainty.
Last quarter, the Fed’s so-called dot plot projected a full percentage point of rate cuts for 2025, following a similar magnitude of easing this year. Currently, money markets are pricing in that a cut on Wednesday would be followed by less than two 25 basis-point reductions next year.
“Today’s decision will be less consensual than what the market expects,” said Florent Wabont, an economist at Ecofi Investissements. “It think it’s the end of back-to-back cuts. The big question is how will Jerome Powell communicate this to the market.”
Still, while Wall Street banks have started anticipating fewer reductions, some interest-rate option traders are betting the market’s view is too hawkish and that the Fed would ease policy more closely to what it projected in September: the equivalent of four quarter-point cuts.
US Treasuries were little changed ahead of the Fed announcement. Still, the yield on the 10-year note has surged about 80 basis points since September as traders rethink their outlook for inflation and policy easing.
“I don’t expect the market to move hugely today,” said Guy Miller, chief strategist at Zurich Insurance Co. Yields already reflect potentially fewer rate cuts and “that there is a bit more risk premium already baked into that in terms of the inflation dynamic,” he said.
Bloomberg’s gauge of the dollar was little changed. The pound fluctuated after UK inflation rose to an eight-month high in November, drifting further above the Bank of England’s 2% target and supporting expectations that it will hold interest rates at its final meeting of the year.
