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Stocks churn ahead of Fed minutes as oil tumbles on price cap plan

  • Fed minutes for November at 1900 GMT
  • American Thanksgiving holiday on Thursday
  • Stock small profits worldwide
  • Eurozone economic data points to a recession
  • China hit by rising COVID-19 infections

LONDON, Nov 23 (Reuters) – Global stock prices on Wednesday ahead of minutes from a Federal Reserve meeting that could shed light on whether the US central bank is considering moderating rate hikes.

The price of crude oil plummeted as the countries of the Group of Seven (G7) looked at a price cap of $65 to $70 per barrel of Russian oil, above where crude is currently traded.

Wall Street would be off to a muted start, with little major corporate news to boost trading ahead of the US Thanksgiving holiday, when markets are closed.

The Fed has hiked rates sharply this year in an effort to curb rising inflation, and New Zealand’s central bank raised interest rates by a record 75 basis points to 4.25% earlier on Wednesday, heralding more likely hikes from the Federal Reserve, European Central Bank and Bank of England next month.

“The expectation is that the Fed is probably closer to the end of the cycle of rate hikes than it started, especially in terms of the size of the rate hikes, most of it is behind it,” said Mike Hewson, chief markets analyst at CMC Markets. .

The MSCI All Country stock index (.MIWD00000PUS) was up 0.16%, though it was still down about 18% for the year.

In Europe, the STOXX (.STOXX) index of 600 companies rose 0.3%, keeping it around 10% for 2022.

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

“The appreciation of markets at large in the fourth quarter is driven by a belief that the Fed is becoming aware that the pace and magnitude of their interest rate hikes could come to a conclusion in the near term. It gives markets the trust that this will happen.” the end,” said Bizer.

The downturn in eurozone activity eased somewhat in November, but overall demand continued to fall as consumers cut spending amid a cost-of-living crisis.

“The outcome allays fears of a serious downturn and is consistent with a mild technical recession around the turn of the year,” ING Bank said in a note to clients.

In China, authorities imposed restrictions to contain a rapid rise in COVID-19 infections, compounding investor concerns about the world’s second-largest economy.

Reuters chart

COVID RESTRICTIONS

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

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

“The biggest story for investors in Asia is still the reopening of China,” said Suresh Tantia, Credit Suisse senior investment strategist in Singapore.

“We had seen Chinese markets rise up to 20%, but those expectations are being revised. We think a reopening will be a slower process and not rushed.”

China reported 29,157 new COVID infections for Nov. 22 on Wednesday, compared to 28,127 new cases a day earlier. Cases in Beijing and Shanghai are steadily rising and remain high in several major manufacturing and export centers, prompting authorities to close some facilities.

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The yield on benchmark 10-year Treasuries traded at 3.7799% compared to the US closing price of 3.758% on Tuesday.

The two-year rate, which is rising as traders expect higher interest rates from the Fed, came in at 4.5434%, compared to a US closing rate of 4.517%.

Prior to the Fed minutes, the dollar index, which tracks the US currency against a basket of those of other major trading partners, was slightly weaker.

The common euro currency was up 0.17% to $1,032.

“The US dollar lost a bit of its recent gains (as) the central bankers’ consensus on how much more interest rates should rise is fading,” Commonwealth Bank analyst Tobin Gorey wrote Wednesday.

Oil prices rose an inch after data last week showed a larger-than-expected decline in US crude oil, overturning concerns about lower fuel demand from China.

US crude reversed previous gains, falling 2.5% to $78.92 a barrel, while Brent oil fell 2.4% to $85.99 a barrel.

Spot gold traded at $1,736 an ounce, down 0.2% on the day.

As the FTX stock market collapse continues to shake cryptocurrency markets, Bitcoin rose 2% to $16,483.

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

Our standards: The Thomson Reuters Principles of Trust.

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