Global stocks hit new high, dollar gains ahead of Fed move
- Asian stocks hit by Chinese concerns
- European equities open lower
- RBA Abandons Its Performance Target; focus on the Fed meeting
NEW YORK, Nov. 2 (Reuters) – Global equities hit a new high on Tuesday, driven by the rise in shares on Wall Street, and the dollar strengthened as strong earnings fueled sentiment as investors wait details of the Federal Reserve’s decision to scale back its massive stimulus package.
The S&P 500 and Nasdaq stock indexes hit new highs thanks to a host of strong earnings updates, while the STOXX 600 in Europe also edged up on strong corporate results and the French CAC 40 index ( .FCHI) has reached its highest level since 2000.
The Australian dollar fell after the Reserve Bank of Australia (RBA) sounded more accommodating than expected during the first of three highly anticipated central bank meetings this week.
The Fed will issue a statement at the end of its two-day meeting on Wednesday, when it is expected to announce the start of the cut to its bond buying program. Markets are also forecasting a hike in interest rates at the Bank of England meeting on Thursday.
Concerns about supply chain disruptions and rising inflation are overblown, as are concerns about the Fed’s shrinking, said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.
“These are temporary factors that will work themselves out,” Ghriskey added. “Profits and revenues continue to surprise on the upside as this is a very strong economy.”
MSCI’s All Country World Index (.MIWD00000PUS), which tracks the performance of stocks in 50 countries, rose 0.1% to 749.23 after hitting an all-time high.
On Wall Street, the Dow Jones Industrial Average (.DJI) was up 0.15%, the S&P 500 (.SPX) by 0.30% and the Nasdaq Composite (.IXIC) by 0.29%.
Sentiment was mixed during the Asian session, with stocks and bonds of Chinese real estate developers falling amid concerns over contagion from the China Evergrande group debt crisis. A debt swap from one of the nation’s leading home builders has sparked a wave of credit warnings. Read more
Matthias Scheiber, global head of portfolio management at Allspring Global Investments, said he expects European and US stocks to recover during the session as corporate earnings are released.
“There are probably more concerns in earnings about inflation and pressure on margins, rather than the systematic impact of the Chinese real estate market. … We haven’t seen any negative spillovers in other sectors.” , Scheiber said.
The RBA has taken an important step towards unwinding the central bank’s pandemic-induced stimulus measures by lowering bond yield targets and declaring that a rate change in 2023 is possible as inflation has risen faster than expected. But he pushed back the expectations of the hawkish market. Read more
Short-term Australian government bond yields fell and the Australian dollar slipped 1.0% to $ 0.7448.
The US dollar index, which tracks the greenback against a basket of six currencies, rose 0.067% to 93.995.
The euro fell 0.10% to $ 1.1594, while the yen traded 0.19% to $ 113.7600.
US Treasury yields drifted as the market waited for the Fed’s announcement.
The market doesn’t think economic growth will be very strong next year, said Joe LaVorgna, chief economist for the Americas at Natixis in New York.
âThe real interest rate has stayed low if it hasn’t come down and it really depends on growth. The market just doesn’t think growth will be very robust,â LaVorgna said.
The 10-year US Treasury bill fell 2.8 basis points to drop 1.5453%.
European government bond yields fell, pausing after a massive selloff triggered by the European Central Bank last week, disappointing expectations of strong reluctance against aggressive market prices for rate hikes .
German 10-year rates slipped 5.8 basis points to -0.162%.
Oil fell further below $ 85 a barrel, still near a three-year high, in choppy trade ahead of weekly U.S. supply reports which are expected to show increased crude inventories.
Brent crude fell 0.5% to $ 84.29 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 0.89% to $ 83.30.
Reporting by Herbert Lash; Editing by Will Dunham
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