Global stocks were mixed on Monday as investors adopted a cautious stance while awaiting Jerome Powell's testimony to Congress later this week. Investors are hoping for clues on whether the Federal Reserve will shift to a less hawkish stance on interest rates.
Tech stocks performed well, continuing their rally on expectations that the Fed may slow its aggressive rate hike campaign. Billions of dollars have flowed into big tech stocks recently, partly due to their perceived productivity benefits from artificial intelligence. However, some warn that Fed hawkishness could hit valuations.
In the UK, the pound strengthened to near April 2022 highs against the dollar on bets the Bank of England will raise rates sharply this week to curb inflation. UK bonds showed a yield curve inversion, which is seen as a potential recession signal.
In Asia, Japan's Nikkei fell 1% while China's CSI 300 retreated 0.9% as hopes for major stimulus were dashed after a government meeting. Goldman Sachs cut China's GDP growth forecast to 5.4% for the year. However, some anticipate an interest rate cut by the PBOC this week.
The dollar index was little changed while the euro held near a five-week high. Oil prices declined slightly on Monday.
Overall, markets adopted a cautious tone as they await clues from the Fed this week on the outlook for monetary policy and interest rates. Tech stocks performed well on expectations of less hawkish Fed action, though some warn valuations could be hit if the Fed maintains a hawkish stance.
