Meanwhile, political risk has ramped up in Europe where elections are going in full swing across the Netherlands, France and Germany.
“The ‘pothole’ is a political one with far-right parties gaining ground in opinion polls ahead of both a Dutch and French ballots in spring,” Luca Paolini, chief strategist at Pictet, said in a research note, according to Bloomberg. “We are scaling back exposure to European stocks, albeit retaining our overweight stance.”
Looking ahead, investors are watching out for the U.S. jobs report later in the week as a key indicator of economic data that could affect the Federal Reserve’s monetary policy at its upcoming March meeting. Many traders are already anticipating a rate hike in the next session, with J.P. Morgan Chase & Co. warning that hawkish Fed rhetoric has raised the likelihood of a short-term pullback.
“I think the market is suggesting to the Fed that it’s time to get on with it, and the earlier they take advantage of it, the more gradually they can go,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co., told the Wall Street Journal.
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