US stocks pare losses at start of Fed week; Treasuries gain

Bloomberg

The slide in US stocks slowed somewhat as investors weighed the impact of the Federal Reserve on growth in an economy already buffeted by trade, geopolitical tensions and a possible government shutdown.
All major American equity benchmarks opened lower, before a tech rally pared some losses, as the Fed looked certain to raise rates after its policy meeting on Wednesday. Investors will scrutinise the central bank’s statement for clues whether its intentions for 2019 have changed.
One market observer has already weighed in on the Fed: President Donald Trump tweeted on Monday that it was “incredible” the central bank was considering a rate hike, given low inflation and a
strong dollar.
Treasuries and gold gained, and the yen nudged higher, after a bout of risk-aversion hammered global equities in recent sessions.
Johnson & Johnson sank on fresh worries its asbestos scandal will intensify, while the S&P 500’s health sector plunged after a Friday court ruling jeopardised Obamacare. Goldman Sachs lost more than 2 percent after Malaysia filed charges against the firm.
“This is a spillover from Friday,” said Kristina Hooper, chief global market strategist at Invesco Ltd. “We haven’t gotten any good news to change the direction of markets, and so this is a continuation of the nervousness we saw around concerns about a potential global slowdown.”
Global growth forecasts for next year are being trimmed as a trade war between the biggest economies bites and markets reel from a volatile 2018. Meanwhile, political uncertainty still grips investors. There are yet more personnel changes within the Trump administration and confusion remains over Britain’s future relationship with the EU.
Retailers led declines in the Stoxx Europe 600 Index as Asos Plc plunged after warning that its Christmas shopping season got off to a disastrous start. Emerging-market shares turned lower.
The Federal Reserve holds its final policy meeting of 2018 on Tuesday and on Wednesday. The rate decision will be followed by a press conference with Chairman Jerome Powell. The Bank of Japan’s monetary policy decision is due on Thursday, followed by a briefing from Governor Haruhiko Kuroda. A Bank of England decision is also on Thursday.
The S&P 500 Index fell 1.1 percent in New York. The Stoxx Europe 600 Index dropped 1.3 percent, the biggest fall in a week. The UK’s FTSE 100 Index fell 0.8 percent. The MSCI Emerging Market Index declined 1.4 percent.
The Bloomberg Dollar Spot Index declined 0.3 percent. The euro rose 0.4 percent to $1.1346. The British pound jumped 0.3 percent to $1.262. The Japanese yen increased
0.4 percent to 112.95 per dollar, the strongest in more than a week.
The yield on 10-year Treasuries dipped two basis points to 2.87 percent. Germany’s 10-year yield gained one basis point to 0.26 percent. Britain’s 10-year yield rose three basis points to 1.275 percent.