US markets resilient ahead of this week's Fed meeting

The highest-profile report will likely be Thursday, when the Commerce Department will release its first estimate of the economy's output in the April-June quarter.

Higher rates make economic conditions more difficult, and too-aggressive hikes could cause a recession. Pic: Reuters

US markets marched toward gains before the bell on Monday ahead of this week's meeting of the Federal Reserve, which is attempting to tamp down inflation without risking a recession.

Futures for the Dow Jones Industrial Average gained 0.4 per cent and futures for the S and P 500 rose 0.3 per cent.

European shares shifted from losses to gains after Asian markets finished lower and oil prices declined.

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On Wednesday, most economists expect the Fed to announce its second 0.75 per cent point increase in its short-term rate in a row, a hefty increase that it hasn't otherwise implemented since 1994. That will put the Fed's benchmark rate in a range of 2.25 per cent to 2.5 per cent, the highest level since 2018.

The US economy is slowing, but healthy hiring shows it is not yet in recession, Treasury Secretary Janet Yellen said Sunday on NBC's "Meet the Press".

She spoke ahead of the release this week of a slew of economic reports that will shed light on an economy currently besieged by rampant inflation as interest rates rise.

The highest-profile report will likely be Thursday, when the Commerce Department will release its first estimate of the economy's output in the April-June quarter.

"While rising jobless claims, softer home sales, and a buildup in gasoline inventory show the Fed front-loading rate hikes are causing a slowdown and bringing inflation under control, the issue is at what cost," Stephen Innes of SPI Asset Management said in a commentary.

Some economists forecast it may show a contraction for the second quarter in a row. The economy shrank 1.6 per cent in the January-March quarter. Two straight negative readings is considered an informal definition of a recession, though in this case economists think that's misleading.

Similar data from Europe have underscored the weakness of the global economy as central banks jack up interest rates.

Higher rates make economic conditions more difficult, and too-aggressive hikes could cause a recession.

The DAX in Germany rose 0.3 per cent, the CAC 40 in Paris climbed 0.4 per cent higher while Britain's FTSE 100 was up 0.2 per cent.

In Asian trading, Tokyo's Nikkei 225 shed 0.8 per cent to 27,699.25 and the Kospi in Seoul rose 0.4 per cent to 2,403.69.

Hong Kong's Hang Seng declined 0.2 per cent to 20,562.94, while the Shanghai Composite index gave up 0.6 per cent to 3,250.39.

In Australia, the S and P/ASX 200 edged 1.6 points lower to 6,789.90.

On Friday, the benchmark S and P 500 lost 0.9 per cent, breaking a three-day rally that had carried it to its highest level in six weeks but still gaining 2.5 per cent for the week. The Dow Jones Industrial Average declined 0.4 per cent, while the Nasdaq sank 1.9 per cent.

The 10-year Treasury yield was at 2.82 per cent early on Monday. On Friday, it fell to 2.76 per cent from 2.91 per cent late Thursday.

Besides an easing of Treasury yields, falling prices for crude oil in recent weeks has raised hopes that inflation may be peaking. Auto club AAA says on its website as of Monday that the average price of a gallon of regular gas is USD 4.36 per gallon. That's down 16 cents per gallon from a week ago, and 55 cents cheaper than one month ago, when the average price was USD 4.91 per gallon.

Early on Monday, US benchmark crude oil was USD 1.68 higher at USD 96.38 per barrel in electronic trading on the New York Mercantile Exchange. It gave up USD 1.65 on Friday to USD 94.70 per barrel.

Brent crude, the pricing basis for international trading, rose USD 1.29 to USD 99.67 per barrel.

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