Investors ease ahead of Fed minutes, Eurozone recession fears rise

  • The Fed waited minutes
  • Thanksgiving is a public holiday in the United States on Thursday
  • Stocks are making small gains globally
  • Eurozone economic indicators point to recession
  • China is facing increasing COVID-19 infections

LONDON, Nov 23 (Reuters) – Global stocks were little changed on Wednesday as investors eyed the minutes of the Federal Reserve meeting, which could shed light on whether the U.S. central bank is considering a rate hike.

The Fed has raised interest rates significantly to curb rising inflation, and New Zealand’s central bank earlier raised interest rates by a record 75 basis points to 4.25%, raising the possibility of more hikes by the Federal Reserve, the European Central Bank and the Central Bank. was a messenger. England next month.

“There is an expectation that the Fed is closer to the end of the rate hike cycle than the beginning, certainly with the bulk of rate hikes behind them,” said Mike Hewson, chief market analyst at CMC Markets.

“There’s very little interest going into the Thanksgiving weekend, and so the markets are inertially dragged to a higher rate. If you’ve made money this year, you’re probably done,” Hewson said.

US markets are closed Thursday for Thanksgiving. Minutes of the Fed’s November meeting should be presented on Wednesday.

The MSCI All Country stock index (.MIWD00000PUS) rose 0.12%, though it is still down about 18% for the year.

The STOXX (.STOXX) index of 600 companies in Europe rose 0.1%, leaving it on track for 2022 by about 10%. US stock futures, the S&P 500 e-minis, were slightly firmer.

David Bizer, managing partner at investment manager Global Customized Wealth, said investors are being guided by what they think the Fed will do next as signs of a slowdown in the US economy become clearer.

“In general, the rally in the markets in the fourth quarter is driven by this belief that the Fed has woken up to the pace and magnitude of rate hikes that may be coming to a near-term conclusion. This gives the markets confidence that this is the end,” Bizer said.

On the corporate news front, Credit Suisse ( CSGN.S ) shares fell nearly 6% after the bank said it would post a pre-tax loss of 1.5 billion Swiss francs in the fourth quarter.

The fall in business activity in the euro zone eased slightly in November, but aggregate demand continued to weaken as consumers cut back on spending amid the cost-of-living crisis, data showed the currency bloc is slipping into recession.

Authorities in China have imposed restrictions to curb a rapid rise in COVID-19 infections, raising investor concerns about the world’s second-largest economy.

Reuters graphics


MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) rose 0.5% overnight, helped by gains in U.S. stocks. The index is up 12% so far this month.

Hong Kong’s Hang Seng Index (.HSI) rose 0.6%, while China’s CSI300 Index (.CSI300) rose 0.1%.

“The biggest story for investors in Asia is still China’s reopening,” said Suresh Tantia, chief investment strategist at Credit Suisse in Singapore.

“We have seen Chinese markets rise up to 20%, but these expectations are being reversed, we think the reopening will be a slower process and not rushed.”

On Wednesday, China reported 29,157 new cases of COVID-19 on November 22, compared with 28,127 a day earlier. Cases have been rising steadily in Beijing and Shanghai and remain high in several major manufacturing and export hubs, prompting authorities to close some facilities.

The yield on the 10-year Treasury note traded at 3.7483%, compared with a US close of 3.758% on Tuesday.

The two-year yield rose to 4.5269%, compared with a U.S. close of 4.517%, rising on traders’ expectations of higher Fed funds rates.

Ahead of the Fed’s minutes, the dollar index, which tracks the dollar against a basket of other major trading partners’ currencies, rose 0.019%.

The euro unit currency also strengthened slightly during the day and reached 1.0312 dollars.

“The US dollar has given up some of its recent gains (as) central banks’ consensus on more interest rate hikes is breaking,” Commonwealth Bank analyst Tobin Gorey wrote on Wednesday.

Oil prices rose last week as U.S. crude showed a bigger-than-expected decline, outweighing concerns about slowing fuel demand from China.

US crude oil rose 0.8% to $81.59 a barrel, while Brent oil rose 1% to $89.23/barrel.

Spot gold fell 0.16% to $1,737 during the day.

Bitcoin rose 2.5% to $16,547 as the collapse of the FTX exchange continued to rock the cryptocurrency markets.

Reporting by Scott Murdoch in Sydney and Huw Jones in London; Edited by Kenneth Maxwell and Kim Coghill and Miral Fahmy

Our standards: Thomson Reuters Trust Principles.

Source link