By Andre Janse van Vuuren and Winnie Hsu

Bloomberg) — Stocks retreated across most regions on Tuesday as traders awaited the Federal Reserve’s final interest-rate decision for 2024 and its monetary policy forecasts.

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Futures contracts for both the S&P 500 (ES=F) and Nasdaq 100 (NQ=F) dropped 0.3% after the main US benchmark closed within a whisker of an all-time high on Monday. Europe’s Stoxx 600 (^STOXX) fell 0.6% for a fifth day of losses in six sessions, while a key Asia gauge erased gains to trade 0.5% lower.

US stocks are on course to outperform their global peers by a wide margin this year as optimism about the impact of artificial intelligence, falling rates and the outlook for the economy fuel investor confidence. While Fed Chair Jerome Powell is widely expected to announce a further 25 basis points of easing on Wednesday, the path for the following months is less clear.

Money markets are seeing an 80% chance of three reductions next year, compared to the small probability of a fourth reduction seen at the start of the month.

Investors and traders are “trimming positions ahead of the Fed and the Christmas break,” said Joachim Klement, a strategist at Panmure Liberum.

In foreign-exchange markets, an index of Asian currencies fell to the lowest in more than two years amid pessimism over China’s economic outlook and speculation that Donald Trump’s second administration will drive dollar gains. The yen snapped a six-day losing streak after weakening beyond the 154 level versus the dollar overnight.

The yen’s rapid decline in the past week had strategists warning that further weakness may trigger verbal intervention from authorities and add pressure on the Bank of Japan to hike rates. Traders are pricing in a less than 20% chance of a rate hike in December, according to swaps market pricing.

A Bloomberg index for the greenback was little changed, while the 10-year Treasury yield advanced 2 basis points to 4.42%.

Markets shrugged off news that Chinese leaders were planning to set an annual growth goal of about 5% for next year and raise the budget deficit, as reported by Reuters.

The yuan was little changed at around 7.29 per dollar in both onshore and overseas trading. The yield on 10-year bonds hovered near a record low, while China’s CSI 300 equity benchmark moved in a narrow range.

Key events this week:

• UK CPI, Wednesday

• Eurozone CPI, Wednesday

• US rate decision, Wednesday

• Japan rate decision, Thursday

• UK BOE rate decision

• US revised GDP, Thursday

• Japan CPI, Friday

• China loan prime rates, Friday

• Eurozone consumer confidence, Friday

• US personal income, spending & PCE inflation, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.6% as of 8:27 a.m. London time

• S&P 500 futures fell 0.3%

• Nasdaq 100 futures fell 0.3%

• Futures on the Dow Jones Industrial Average fell 0.4%

• The MSCI Asia Pacific Index fell 0.5%

• The MSCI Emerging Markets Index fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.0494

• The Japanese yen was little changed at 154.07 per dollar

• The offshore yuan was little changed at 7.2913 per dollar

• The British pound was little changed at $1.2689

Cryptocurrencies

• Bitcoin rose 0.9% to $107,064.14

• Ether fell 1% to $4,007.57

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.42%

• Germany’s 10-year yield was little changed at 2.25%

• Britain’s 10-year yield advanced five basis points to 4.49%

Commodities

• Brent crude fell 0.2% to $73.77 a barrel

• Spot gold fell 0.2% to $2,648.58 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from James Hirai and Kit Rees.

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