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Marketmind: Fasten your seatbelts

Marketmind: Fasten your seatbelts © Reuters. FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly/File Photo

By Stephen Culp

(Reuters) – A look at the day ahead in markets from Stephen Culp, New York stock market reporter.

Wall Street’s downbeat start to an action-packed week has set a bumpy course for Asian markets on Tuesday.

U.S. stocks appeared to take a breather near the end of a month of solid gains, dipping into red as market participants gird their loins for multiple central bank policy decisions and a spate of high profile megacap earnings, with the Labor Department’s hotly anticipated January employment report due on Friday.

The Federal Reserve convenes its two-day monetary policy meeting on Tuesday, which is expected to culminate on Wednesday with a bite-sized 25 basis point hike to the Fed funds target rate.

The Bank of England and the European Central Bank are poised to follow the Fed by hiking crucial interest rates by a more aggressive 50 basis points.

On the earnings front, Caterpillar Inc (NYSE:), General Motors Co (NYSE:), Pfizer Inc (NYSE:), United Parcel Service Inc (NYSE:) and McDonald’s Corp (NYSE:) are expected before Tuesday’s opening bell.

Meta Platforms Inc (NASDAQ:) waits in the wings on Wednesday, with Apple Inc (NASDAQ:), Amazon.com (NASDAQ:) and Alphabet (NASDAQ:) Inc on deck for Thursday.

Those earnings calls, along with Fed Chairman Jerome Powell’s post-rate-decision remarks, will be parsed and scrutinized by investors for clues regarding the likelihood, severity and timing of a potential recession.

Elsewhere, the U.S. dollar gained ground against a basket of world currencies, crude prices plunged as the prospect of rate hikes and robust Russian exports dampened optimism over rebounding Chinese demand.

Speaking of which, the world’s second-largest economy’s fiscal revenue growth decelerated sharply in 2022 to 0.6% from 10.7% in 2021, largely due to Beijing’s strict COVID-19 policies.

Those policies have since been relaxed, sparking hopes of demand revival in China, which could take some of the sting of restrictive central bank policy.

Here are some key developments that could provide more direction to markets on Tuesday:

– South Korea and Japan are expected to post December industrial output and retail sales data

– China due to release manufacturing and composite PMI reports for January

– U.S. will follow Case-Shiller home prices (November), consumer confidence (January) and Chicago PMI (January)

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