https://tmsnrt.rs/2zpUAr4 S&P 500 futures fall, Nikkei futures lower The Fed leads the pack at central bank meetings Market leans towards 75bp from Fed, PBOC eases Dollar steady near multi-year highs

SYDNEY/LONDON, Sept 19 (Reuters) – Shares fell and the dollar steadied on Monday as investors braced for a busy week of central bank meetings that will see borrowing costs rise globally, with a big increase likely in the United States . Markets are fully priced for a 75 basis point rate hike from the Federal Reserve, with futures showing a 20% chance of a full percentage point. They also point to a real possibility that interest rates will reach 4.5% as the Fed is forced to steer the economy into recession to contain inflation. read more Sign up now for FREE unlimited access to Reuters.comSign up “Asset performance during this Fed tightening cycle is very different from the norm for other rate hike episodes,” said David Chao, global market strategist at Invesco. “Typically, the Fed tightens when the economy is booming and most assets are doing well. However, most assets have suffered this time, perhaps because of the burst in inflation and the sharp policy shift.” Trading was lower on Monday with British markets closed for the state funeral of Queen Elizabeth II, but Europe’s STOXX (.STOXX) index fell 0.5 percent to its lowest level in two months, underperforming technology shares. (.SX8P) read more MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) fell 0.6 percent, continuing to set fresh two-year lows, also weighed down by falling tech stocks ( .HSTECH ) S&P 500 futures fell 0.67%, while Nasdaq futures fell 0.83%. In addition to the specific rate hike, investors will be watching Fed members’ rate forecasts, which are likely to be hawkish, putting the funds rate at 4-4.25% by the end of this year and even higher in next year. That risk sent yields on the two-year note jumping 30 basis points last week alone to a 2007 high of 3.92%, making stocks look more expensive by comparison and dragging the S&P 500 down nearly 5% for the week. Bonds are not yet trading as both Japan and Britain are on holiday, but eurozone borrowing costs rose, with short-term yields not far from multi-year highs.

MARKETS SEPARATION

It is not only in the US that interest rate increases are expected. Most banks meeting this week – from Switzerland to South Africa – are expected to post gains, with markets divided over whether the Bank of England will move by 50 or 75 basis points. read more But China’s central bank went its own way and cut the repo rate by 10 basis points to support its struggling economy, leaving blue chips (.CSI300) up 0.1 percent. The other exception is the Bank of Japan, which has shown no sign of abandoning its ultra-easy yield curve policy despite the yen’s sharp slide. read more The dollar rose 0.34 to 143.45 yen on Monday, having retreated from a recent 24-year high of 144.99 amid increasingly vociferous warnings of intervention from Japanese policymakers. The euro was 0.36% lower at $0.9978 and sterling was down 0.3% at $1.1390, just off Friday’s 37-year low, as traders eyed the emergency mini-budget from new British finance minister Kwasi Kwarteng, due on Friday. The dollar index , which measures the currency against six bonds, was 0.4% stronger at 110.03. “We expect the USD to continue to move higher this week to a new cyclical high above 110.8 on the deteriorating global economic outlook,” CBA analysts said in a note. A stronger dollar and yields lifted gold, which fell 0.55% to $1,666 an ounce after hitting lows not seen since April 2020 last week. Oil prices fell, pressured by stronger dollar Brent crude fell 1.3% to $90.18. US crude fell 1.3% to $83.97. Sign up now for FREE unlimited access to Reuters.comSign up Reporting by Wayne Cole in Sydney and Alun John in London. Editing by Sam Holmes, Christian Schmollinger and Ed Osmond Our Standards: The Thomson Reuters Trust Principles.