Sujata Rao gives a look at what’s ahead for markets.

Investors’ concerns about an aggressive Fed rate increase cycle earlier this year were dispelled by signals from China that it was seeking to relax its policy. This would at least partially offset Fed tightening.

Beijing, on the other hand, has largely sat by its feet, occasionally offering some policy support. Even with the dismal economic statistics, Beijing is not afraid to lock down large areas of cities against COVID and has not stopped the yuan’s decline versus the dollar from its 19-month lows.

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Beyond questions regarding the state of the No. 2 economy in the world, there are also concerns about what might happen inside it. BlackRock (NYSE : ), a long-time China bull, highlights another threat to the economy. This is due to tensions rising with the West over Beijing’s tacit support of Russia. BlackRock stated Monday that it had reduced China exposure.

Economic growth worries causing inflation to be the main worry in the markets, and the close below 400 points. Oil is continuing Monday’s 5% drop, while bond yields are sliding.

An equity rebound could be possible Tuesday as U.S. futures are expected to tip higher on Wall Street, while European stocks open higher.

Technicals could be the key. Bearish S&P 500 positioning has been near record highs, Citi data shows, and at two-year highs for European blue chips. Citi predicts that some bears might look to use recent market drops as a way of recouping their gains.

New data has shown that UK shoppers have cut back their spending. The wait for Germany’s ZEW Investor Sentiment Index is over.

The Fed will give speeches later that day to assess whether there are any 75 basis point rate increases. Oder, the Fed may be looking for indicators that economic growth concerns are being taken into consideration.