jan 19  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom world stocks are now flirting with a dangerous thin red line us tech stocks ndx broke below their 100 day moving average last week and closed below the 200 day benchmark yesterday last session also saw the wider us markets spx and world stocks miwo00000pus drop below the 100 day moving average while these major indices have flirted briefly with that level in the past year or so they havent conclusively stayed below that line for longer periods the last time that happened was in the first quarter of 2020 when the pandemic slammed into markets world stocks lost 30 of their value in less than a month before rebounding later in that sense a further drop below the 100day moving average globally could potentially mean more pain in store for stock punters who have already got off to a rocky start this year losing 2 trillion in market cap value with financial markets now wondering whether they went too far in pricing the incoming tightening from the federal reserve whats to expect following next week’s meeting remains highly uncertain the dollar was able to regain ground against the euro “as hardly anyone is likely to have the guts to go into the fomc meeting with dollar shorts” commerzbank forex analysts say but expectations have already run a long way it is difficult for the market to gauge whether it will be surprised they add mentioning “thoughts making the rounds on the market that the fed might hike the key rate by 50bp in march” unicredit analysts point out to talk “that the fed may prove very aggressive on the rates front in march and might even consider an early kickoff of quantitative tightening” qt “these expectations may prove exaggerated” they say ubs analysts say that “the basic reason the fomc does not need to raise rates by 50 bps is that they can signal a higher path tighten financial conditions further and do so in a more methodical and less disruptive way” ubs expects the qt to start in march the chart below shows treasury yields rising to highs not seen since january 2020 things were looking quite ugly about an hour ago when european futures were deep into the red following a rough session on wall street where banking stocks courtesy of goldman sachs earnings and tech stocks got hammered but european equity markets have avoided a selloff so far thanks to luxury stocks which are to the old continents investors what faangs are or were for us traders shares in switzerlands richemont are leading the stoxx 600 and up a whopping 7 after the worlds secondlargest luxury group reported string demand for jewellery and watches that had a positive effect across the sector and frances heavyweights lvmh kering and hermes are up and lifting the paris cac 40 benchmark above the floatation mark the uks burberry is another strong performer rising close to 5 as the luxury brand said annual profit would beat market expectations the retail sector sx86p was also on a roll rising over 2 with spains inditex leading the pack after goldman sachs upgraded the stock due to resilient earnings and cashflow marks  spencer zalando zalgde and kingfisher kgfl were all rising over 2 the tech sx8p sector is also showing signs of resilience losing just 01 a better fate than that of the nasdaq last night the start of the earnings season was also pretty positive for pearson shareholders who saw the stock jump 5 after the education group raised its forecast for all the turmoil across financial markets yesterday the nasdaq creeping dangerously near correction territory and closing below a key 200day moving average probably came as the least surprising feature for investors after all dumping expensive tech and growth stocks when bond yields rise as the federal reserve embarks on an interest hike cycle is seen as basic stock market trading 101 going overweight on banking stocks on tighter monetary policy tightens is another common trade but that one backfired spectacularly when goldman sachs gsn missed quarterly profit expectations and plunged 7 as rising expenses bit into its fourth quarter earnings read more traders are now waiting for bofa bacn and morgan stanley msn to update the market today and see whether the key theme of this new earnings season might just be rising costs including pay denting profits across all industries with european and us stock futures down over 05 its fair to say theres palpable uncertainty on that front as other structural forces of this tightening cycle are only gaining strength in these early days of 2022 the dollar is pumped up against rival currencies with benchmark us treasury yields trading on twoyear highs as the federal reserve shows signs of being more aggressive in tackling inflation while in europe germanys 10year bond yield rose above 0 for the first time since may 2019 moreover latest data showed british consumer price rose to 54 in december its highest since march 1992 a level which might encourage the bank of england to speed up tightening read more even the cautious bank of japan warned investors that inflation may accelerate faster than expected if raw material costs continue to spike read more this came as oil prices are up for a fourth day to levels last seen in 2014 as an outage on a pipeline from iraq to turkey increased concerns about an already tight supply outlook read more key developments that should provide more direction to markets on wednesday uk inflation rises to highest in nearly 30 years read more