WASHINGTON/LONDON, Oct 26 (Reuters) – World shares rose to a five-week high on Wednesday as U.S. stocks were mixed, as investors weighed down disappointing yields from U.S. heavyweight rates on hopes the Federal Reserve will slow its aggressive rate hike. rate increases.
The US dollar index fell to a five-week low as sterling hit its highest level since September 13, continuing its rally since Rishi Sunak became British prime minister.
News that the British government’s plan to fix the country’s public finances will be delayed by more than two weeks, to November 17, boosted bond yields.
Wall Street was in turmoil. The Dow Jones Industrial Average (.DJI) was up 0.51%, the S&P 500 (.SPX) was down 0.13% and the Nasdaq Composite (.IXIC) was down 0.97%.
The MSCI World Stock Index (.MIWO00000PUS) rose 0.36% to a five-week high. Europe’s Stoxx 600 (.STOXX) also touched a five-week high in choppy trade.
Google owner Alphabet ( GOOGL.O ) posted softer-than-expected ad sales after the close on Tuesday and Microsoft ( MSFT.O ) missed revenue forecasts, while a warning from Dutch semiconductor supplier ASM ( ASMI.AS ) weighed on slowing economic growth. added concerns. .
Some of Europe’s biggest banks have warned of rising risks as the economy falters after a trading boom in volatile markets and stronger-than-expected profits helped by higher interest rates. Deutsche Bank ( DBKGn.DE ) posted a better-than-expected rise in third-quarter profit and British bank Barclays ( BARC.L ) also beat profit forecasts.
Asian stocks rose in a sign that some investors were taking comfort in a global rate-hike era that a turnaround may be near.
While the Fed is widely expected to introduce another 75 basis point rate hike in November, the sentiment that the Fed may then begin to slow its aggressive tightening cycle lifted sentiment in equity markets and derailed the dollar rally.
“I wouldn’t want to take the optimism too far. We think it’s too early for the Fed to make a significant turn, and the stronger the markets, the more likely the Fed will want to be more cautious about wanting to make a turn,” said Morgan Stanley- Andrew Sheets, chief cross-asset strategist at
The papers also noted “more downside risk” to earnings.
Data on Tuesday showed home price growth slowing and consumer confidence weakening, with some signs that the Fed’s aggressive rate hikes are starting to cool the labor market.
“It’s too early to declare the ‘all clear’ for equity markets – ie the Fed could push US real rates deeper into restrictive territory – meaning we view this dollar decline as corrective,” Chris said. Turner, global head of markets at ING.
The Bank of Canada has announced a smaller than expected interest rate increase of 50 percentage points. That left the policy rate at 3.75%, a 14-year high, but short of calls for another 75 basis points to stave off stubbornly high inflation.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose more than 1%, while Japan’s Nikkei (.N225) hit its highest level since Sept. 20.
The euro broke above $1 for the first time in five weeks.
Inflation in Australia hit a 32-year high in the last quarter as house construction and gas prices rose. The surprise added pressure on the central bank to reverse a recent turnaround, though markets doubted a dramatic shift would occur.
The Australian dollar rose more than 1%.
The Chinese yuan rose sharply to close the intraday session at its strongest level in two weeks, as traders and corporate clients raced to liquidate long dollar positions.
Traders said market participants were cautious on Tuesday after major state-owned banks were seen selling the dollar to stabilize the market.
Investors increased bets on the Bank of England raising its benchmark rate by a full percentage point on November 3 following the news, putting the odds of such a move at around 37%, higher than before the delay was announced.
Gold prices rose as the dollar and bond yields weakened. Spot prices increased by 0.82%.
Elsewhere, oil prices rose on a weaker dollar and supply concerns. A barrel of US crude oil rose by $2.
Reporting by Dhara Ranasinghe; Additional reporting by Ankur Banerjee in Singapore; Edited by Kim Coghill and David Holmes
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