Equities Pull Back as Traders Wait for Powell – Europe Market Wrap

Stocks fell around the world on Tuesday as investors awaited the Federal Reserve’s final interest rate decision for 2024 and monetary policy expectations.

Nasdaq 100 futures contracts moved lower after technology stocks continued to climb, pushing the index to a new all-time high on Monday. Europe’s Stoxx 600 index dipped 0.4% as lower crude prices weighed on oil-related stocks. A key Asian measure fell 0.5% after reversing gains, as fears over China’s economy persisted.

As global markets enter the last weeks of 2024, US stocks are expected to outperform their peers as optimism about artificial intelligence and lowering interest rates drive investor confidence. Traders are now focussing on Wednesday’s Fed announcement, with Chair Powell generally expected to deliver a quarter-point rate cut.

What happens in the coming months is less certain. While the US economy remains resilient, the risk of inflationary import taxes projected by Donald Trump’s incoming administration may cause Fed officials to reconsider the speed of future rises.

Money markets expect three reductions next year, compared to a low probability of a fourth reduction at the beginning of the month.