(Bloomberg) — European stocks gained and the dollar fell after minutes of a Federal Reserve meeting showed support for more moderate rate hikes.
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The Stoxx Europe 600 index extended its recent rally as the real estate sector outperformed, supported by the prospect of slower interest rate hikes and higher analysts. The shares of Dr. Martens Plc fell the most ever after the cobbler missed sales and profit expectations. An index of global stocks advanced for a third day.
Trading volume is low due to the Thanksgiving holiday of cashless trading in the US stock market. Wall Street futures rose after the S&P 500 closed at a two-month high on Wednesday. Asian equity benchmarks rose.
Minutes from the Fed’s meeting earlier this month showed that many officials supported the need to slow the pace of rate hikes, even as some underscored the case for higher final interest rates. That weighs on expectations that the central bank will raise interest rates by 50 basis points next month, ending a massive 75 basis point hike.
“This was the beginning of a more distant and peaceful narrative from the Fed,” said Sunaina Sinha Haldia, global head of Private Capital Advisory at Raymond James. “Is this the pivot? No, but are we seeing a slowdown in rate hikes and this downward trend toward rate cuts? Yes. I think we can look back and say this is the pinnacle of wax.
Data also showed on Wednesday that US business activity slowed and job applications increased as the economy cooled.
A gauge of dollar strength fell for a third day on Thursday. European bonds rose as traders reduced bets on a rate hike by the European Central Bank, with risk-sensitive Italian debt leading gains. Due to the holiday in the US, there is no trading in government bonds.
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“Some” ECB officials favor a small rate hike in October to tackle record inflation, a report from their last meeting showed. Those who favored a less aggressive move cited the fact that the increase was accompanied by other monetary tightening measures, according to the report released Thursday.
Oil fell as the European Union set a higher-than-expected price cap on Russian crude and there were more signs of a global recession.
Meanwhile, Bank of America Corp. said its retail clients were moving out of bonds and stocks because of recession fears. Bond funds rallied for the 39th straight week, strategists led by Michael Hartnett wrote in a note. Strategists favor holding bonds through the first half of 2023, with equities becoming more attractive in the last six months of next year.
“We remain at risk of recession in the first half, with inflation and interest rate shocks of 2022 accelerating in the second half as recession and credit shocks in the first half of 2023,” the strategists wrote. Ready for.”
Gold rose for a third day on Fed minutes. The precious metal has suffered from the US Federal Reserve’s aggressive monetary tightening policy to curb inflation, which has pushed bond yields and the dollar up, and in turn pushed it down about 16% from its peak in March.
In Asian trading, mainland China equities underperformed as investors weighed the impact of the record number of Covid-19 cases against signs of easing monetary conditions. Official comments aired on Wednesday indicated that the People’s Bank of China would allow banks to draw capital reserves to boost growth.
Main events of the week:
The ECB published the minutes of its policy meeting in October on Thursday
The US stock and bond markets are closed on Thursday for Thanksgiving
US stock and bond markets closed early on Friday
Some important movements in the markets:
Futures on the S&P 500 rose 0.3%, up for the third consecutive day, the longest winning streak since Nov. 8 at 2:33 p.m. New York time
Futures on the Dow Jones Industrial Average rose 0.2%, rising for the third straight day, the longest winning streak since Nov. 8
The MSCI World Index rose 0.4% for the third day in a row, its longest winning streak since Nov. 8
The Bloomberg Dollar Spot Index fell 0.2% for the third straight day, the longest losing streak since November 8.
The euro was little changed at $1.0405
British pound rises 0.5% to its highest level since August 12
The Japanese yen is up 0.8% to its highest level since August 26
Bitcoin rose 0.6% to $16,566.67
Ether rose 2.9% to $1,203.05
West Texas Intermediate crude had changed little
Gold futures rose 0.5%, more than any closing gain since Nov. 11
This story was created with help from Bloomberg Automation.
–With assistance from Allegra Catelli.
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