Global Markets Update: Dollar Holds Steady, Shares Show Slight Dip; All Eyes on Bank of Japan

U.S. stock futures indicate a slight uptick, while the dollar stabilizes as investors await the Bank of Japan's policy update and crucial U.S. inflation data this week.

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Recent attacks by Iranian-backed Houthi militants on Red Sea vessels led to a rise in shares of major shipping companies, especially in Europe. The potential impact on shipping rates boosted oil prices.

The global MSCI index of shares experienced a marginal 0.1% dip. S&P 500 futures rose by 0.2%, and Nasdaq futures saw a 0.1% increase.

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European stocks remained mostly flat after securing their fifth consecutive weekly gain on Friday. Shipping companies, such as Maersk and D'Amico, saw positive momentum, with shares surging between 4% and 6%.

Oil prices climbed amid concerns about potential disruptions in oil supply due to Red Sea attacks. Brent reached $77.14 a barrel, and U.S. crude rose to $71.86.

As central bank policymakers' remarks increasingly influence markets, the Bank of Japan's policy decision will be a focal point this week. Analysts expect 17 out of 28 economists to favor April for initiating the end of negative rates, marking a rare tightening move.

South Korea's main index closed 0.3% higher, seemingly unaffected by reports of North Korea firing a ballistic missile off its east coast.

In the U.S., attention turns to the core personal consumption expenditure (PCE) index, predicted to rise by 0.2% in November, with the annual inflation rate slowing to 3.4%.

Market expectations of a Fed rate cut in March have risen, with futures implying a 74% chance. The dovish outlook also affected the dollar, slipping 0.2% against a basket of currencies.

Yields on 10-year notes stood at 3.90%, having experienced the largest weekly fall since early 2020.

The euro held at $1.0915, supported by market expectations of easing from the European Central Bank and the Bank of England.

Gold, trading at $2,022 an ounce, remains positively influenced by the weakened dollar and lower yields, though still below its recent peak of $2,135.40.

Also Read: Market Watch: Jobs Report Sparks Interest as Futures Experience a Minor Dip