Global stocks mixed before central bank rate decisions

Major European and Asian stock markets traded mixed Monday, the start of a week set to be dominated by central bank decisions on interest rates amid surging inflation.

“Equity markets appear to be adopting a glass half full approach to recent events, even as US inflation came in at its highest levels in 39 years on Friday, amidst a backdrop of increasing concern that central banks are massively behind the curve,” said CMC Markets analyst Michael Hewson.

The Federal Reserve, Bank of Japan, Bank of England and European Central Bank are all meeting over monetary policy this week.

The spread of the Omicron coronavirus variant could see the major central banks sit tight and delay raising interest rates despite soaring prices, according to analysts.

Wall Street hit a fresh record high Friday despite the latest spike in US consumer prices, while the market expects the Fed to raise interest rates at least twice in 2022.

“Global equities had a solid run last week and we’ll see if the goodwill lasts,” said Chris Weston, head of research with Pepperstone Financial.

Any moves by the Fed, along with new developments in the Omicron variant, should dictate sentiment, he said.

The dollar on Monday made solid gains against major rivals, including the British pound which, like the FTSE 100 stocks index, was weighed down by Prime Minister Boris Johnson’s warning of a looming “tidal wave” of Omicron.

Johnson has brought forward a target and now wants to give all UK adults a booster jab by the new year.

A group of airlines on Monday accused the UK government of a “haphazard and disproportionate approach” to travel restrictions in the wake of Omicron and demanded further state help to prevent a “permanent scarring” of the industry.