LIVE MARKETS Buy the dip? Or pray for the Fed to put? -Reuter

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BUY THE DIP? OR PRAY FOR FED PUT? (08:14 GMT)

Bears prowl the markets as another type threatens the eastern flank of Europe.

It is probably futile to expect the Russian bear to pull back the way Wall Street bears did on Monday night when sentiment soared, allowing the S&P 500, which was 4% in the red at some point, to close higher.

Clearly, bearish buyers haven’t completely fled the stock markets. Or was it a function of all those short positions on the Nasdaq, which suddenly ended up in the money?

The momentum failed to materialize, with Asia deep in the red and Wall Street futures down almost 2%. Options market readings are also not reassuring; Put option trading, used to place bearish bets, outnumbered bullish call options by 1.1 to 1 on Monday, reportedly the most bearish ratio since March 2020.

Outside the markets, the global economic situation does not look too bad. Monday’s PMI advance readings showed a slowdown in business activity in December due to Omicron, but signaled a spike in supply chain delays. South Korea’s GDP grew at the fastest pace in 11 years and among US companies that reported fourth-quarter profits, 77% beat forecasts.

Amid this market rotation, the Fed begins a two-day meeting that may well be the last before an interest rate hike in March. Many hope that he will pay attention to the tightening of financial conditions that these massive stock sales inevitably cause. JPMorgan cites the strong earnings season to argue that the downtrend is overdone. And after all, they add “the worst case scenario could see the return of the Fed put”.

Key developments that should further guide markets on Tuesday:

-Singapore tightened monetary policy settings in its first off-cycle move in seven years

-South Korea’s economy grew at fastest pace in 11 years in 2021

– Australia’s core inflation hit its fastest annual pace since 2014 in the December quarter

-Credit Suisse warns of Q4 net loss

-IFO survey in Germany

– Emerging markets: Central Bank of Hungary

-January U.S. Consumer Confidence

– Auction of US 5-year banknotes (55 billion dollars)

– US profits: General Electric, Johnson & Johnson, 3M, Xerox, Invesco, American Express, Verizon, Microsoft, Capital One

-European results: SEB, Rémy Cointreau, Logitech, Ericsson

(Sujata Rao)

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EUROPE VIEWS TEMPORARY REBOUND IN VOLATILE DAY (0730 GMT)

European stock futures rise on the back of a surprise late rebound on Wall Street on Monday, but volatility is expected to persist as rates and geopolitical risks reduce visibility on the near-term direction of markets.

So while contracts on the Euro STOXX 50, DAX and FTSE indexes rose to trade around 0.6% after the region had its worst day since June 2020, futures on the Nasdaq fell more than 2% and those on the S&P 500 slipped 1.6. %.

Investors remain worried about the possibility of a military conflict in Ukraine and the approach of a key Fed meeting that could provide guidance on the timing and pace of rate hikes. Read more

(Danilo Masoni)

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