Stocks Resume Rally With Slower Rate-Hike Bets: Markets Wrap

(Bloomberg) — Stocks advanced, with U.S. futures rebounding from worries about technology earnings while Hong Kong’s benchmark gauge rose for a second day. The dollar stabilized after a two-day decline.

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A global stock index is headed for a fifth day of gains, its longest stretch in more than two months, amid growing expectations of a moderation in US rate hikes. A tech rally powered Hong Kong shares to further erode losses incurred earlier this week after President Xi Jinping tightened his grip on power. Japanese stocks led declines in Asia.

The Bloomberg gauge of the dollar remained steady, with the offshore yuan giving up some of Wednesday’s gains. The yield on the 10-year Treasury bond settled around 4% after dipping below the threshold earlier, with investors positioning for less aggressive rate hikes as earnings and economic data point to a slowdown . The benchmark US yield has fallen more than 20 basis points over the past two days.

Amid the challenges for equity investors, central banks are providing some optimistic signs that less aggressive monetary tightening may be in the offing. The Bank of Canada raised interest rates by a smaller-than-expected amount on Wednesday, adding to suggestions that the Federal Reserve is also nearing a downshift.

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A contraction in services and manufacturing and fewer new home sales showed that the Fed’s efforts to cool the economy seem to be paying off. Still, economists expect the Fed to increase by 75 basis points for the fourth consecutive time when it meets next week.

“The only relief that will make them stop will be signs that inflation is slowing down and we’re not there,” said Nancy Daoud, a private wealth advisor at Ameriprise Financial, in an interview on Bloomberg TV. “They will stick to their guns and raise rates in November and again in December.”

The European Central Bank is also projected to increase by 75 basis points later Thursday.

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US futures rose, overcoming a 24% decline for Meta Platforms Inc. in after-hours trading after weak third-quarter earnings. Wednesday’s decline for Facebook’s parent, Amazon.com Inc., Alphabet Inc. and Microsoft Inc. dragged the S&P 500 into losses as investors grew uncertain about technology profits. Samsung Electronics Co. of South Korea was little changed after reporting weak earnings.

Mainland China stock indexes were little changed, while Australian equities rose.

Oil rose further after hitting its highest level in about two weeks after US Secretary of State Anthony Blinken said a deal with Iran was unlikely to progress in the short term. Traders bet on a rising price for aluminum as the United States considers adding the metal to sanctions against Russia, a major producer.

Read More: Stocks Widen on Day of Severe Moves Below Market Surface

Main events this week:

  • ECB rate decision, Thursday

  • US GDP, durable goods orders, initial jobless claims, Thursday

  • Bank of Japan policy decision, Friday

  • US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday

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Some of the main movements in the markets:

Stores

  • Futures on the S&P 500 were up 0.5% as of 10:45 am Tokyo time. LS&P 500 down 0.7%

  • Nasdaq 100 futures rose 0.5%. The Nasdaq 100 fell 2.3%

  • The Topix Index fell 0.4%

  • The S&P/ASX 200 Index rose 0.7%

  • The Hang Seng Index rose 2.8%

  • Shanghai Composite Index rose 0.3%

  • Euro Stoxx 50 futures fell 0.4%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0077

  • The Japanese yen rose 0.2% to 146.07 per dollar

  • The offshore yuan was little changed at 7.1932 per dollar

Cryptocurrencies

  • Bitcoin was little changed at $20,739.65

  • Ether rose 0.4% to $1,560.32

Bonds

Commodities

  • West Texas Intermediate crude rose 0.4% to $88.26 a barrel

  • Spot gold rose 0.2% to $1,667.69 an ounce

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