The ASX 200 dropped 1.5% last week and the selling is expected to continue with futures markets pointing to another 0.5% decline today.

Wall Street didn’t provide much in the way of direction with the S&P 500 closing the week flat, the Dow fell 0.2%, while the Nasdaq gained 0.8%.

The S&P 500 only broke even (and the Nasdaq gained) largely thanks to Broadcom jumping 24%, passing the trillion-dollar capitalisation mark for the first time, on news of strong expected demand for its AI chip.

Across the index there were more losers than winners, while broader small cap Russell 2000 dropped 0.6%.

Over the week the S&P 500 shed 0.6% as investors took some profits off the table, while the Russell 2000 fell 2.6% indicating a fairly widespread retreat in sentiment.

US Treasury bond yields rose to a three-week high ahead of this week’s Federal Reserve rates decision.

While a 25bp cut is baked in by the market, the path of further cuts next year is less clear.

With inflation still hanging around, the Fed is expected to signal further cuts will be either paused or, at least, slowed.

In Europe, the Euro Stoxx slipped after three consecutive weekly gains and the UK’s FTSE slipped marginally as well.

Oil rose on Friday on speculation of tighter supplies and greater demand down the track.

The global benchmark Brent crude climbed 1.5% to $US74.49 a barrel, while West Texas Intermediate was up 1.8%, both hitting their highest levels since early November.

“This strength is being driven by … expectations of tighter sanctions against Russia and Iran, more supportive Chinese economic guidance, Mideast political havoc and prospects for a Fed (US Federal Reserve) rate cut next week,” analysts at energy advisory firm Ritterbusch and Associates wrote in a note to clients.

Gold slipped 1.1% after regaining its mojo last week on the back of central banks, particularly China’s, re-entering the market and a global trend to cutting rates.