Stocks Are Rangebound Due To Rate Hike Fears

Investors awaited more earnings from companies and were concerned that central banks would continue to raise interest rates for longer than expected Monday as European and US stocks moved little.

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Following a fresh record-high of 7,552 points earlier in the session, the London FTSE 100 closed higher on Monday, but the Paris CAC 40 finished lower.

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Dow Jones edges higher on Wall Street as investors prepare for a raft of corporate results expected in the United States this week that will provide insight into the health of the world's largest economy. However, S&P 500 and Nasdaq Composite both dipped.

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IG's chief market analyst, Chris Beauchamp, said this afternoon: "Stocks are left bereft this afternoon, as there is little on the calendar today and earnings tomorrow."

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As earnings start coming through thick and fast tomorrow, the session will no doubt heat up," he said.

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Despite the prospect of further rate tightening in the US, the dollar firmed and oil prices fell.

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Even though analysts say the ECB, US Federal Reserve, and Bank of England are less likely to raise borrowing costs since inflation has been cooling, consumer prices have remained high.

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Frances Stacy, at Optimal Capital Advisors, believes that not all of the rate hikes have been properly absorbed by the system.

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Following data showing a substantial drop in US retail sales on Friday, Stacy cautioned, "I don't think we're out of the woods yet."

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The market fears that the tightening of monetary policy by central bankers will lead to a recession.

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Higher interest rates caused the value of bond portfolios to decline last month, leading to the collapse of US regional banks.

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The US banking sector was further reassured last week by earnings that beat forecasts.

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Despite JPMorgan's report last week that profits rose to $12.6 billion from $11.3 billion, the company also announced that it had taken additional reserves under the premise of "a moderate recession becoming more likely due to tightening financial conditions".

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In Patrick O'Hare's opinion, recession hangs over the market like a chronic illness, not a death sentence, a condition that market players have difficulty escaping.

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The first-quarter results of several major companies are being released this week, including those of Bank of America, Morgan Stanley, Johnson & Johnson, Netflix, Tesla, Ericsson, Nokia, and Morgan Stanley.

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The release of Chinese growth data Tuesday, the first without painful zero-Covid restrictions, was eagerly awaited by traders elsewhere.

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