Expectations are set for a weak opening for Wall Street this week following a public holiday on Monday. This comes in light of cautionary comments from Federal Reserve officials and a less substantial rate cut in China than anticipated, both factors contributing to a dip in confidence.
Fed Governor Christopher Waller expressed concern on Friday, noting that “core inflation is not reducing as I had anticipated.”
Similarly, Richmond Fed President Thomas Barkin voiced his comfort with the prospect of additional rate hikes as inflation is yet to be steered back towards the 2% mark.
Market traders currently predict a 74% likelihood of a single 25-basis-point rate increase this year, likely to occur in July. This is despite indications from the US central bank that borrowing expenses could witness a surge of up to half a percentage point by the end of the year, as suggested by CMEGroup’s Fedwatch Tool.
The market is now poised for further remarks from Fed officials, including comments from Fed Vice Chair Michael Barr later in the day and Fed Chair Jerome Powell’s biannual monetary policy testimony before the US House Financial Affairs Committee on Wednesday.
Further dampening the mood, China implemented a smaller-than-predicted cut of 10 basis points to its benchmark lending rates. This represents the first cut in the nation’s loan prime rate in ten months as it attempts to reinforce its economic recovery.
In premarket trading, both the Dow Jones Industrial Average and S&P 500 witnessed a 0.4% decline, while the Nasdaq 100 fell by 0.5%.
