Equities Advance, Dollar Falls on Fed Rate Outlook: Markets Wrap




  • In Business
  • 2022-11-24 06:52:53Z
  • By Bloomberg
 

(Bloomberg) -- A gauge of global stocks headed for a third straight gain on Thursday and the dollar fell after Federal Reserve meeting minutes showed support for tapering interest-rate increases.

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US futures climbed after the S&P 500 closed at a two-month high Wednesday before the Thanksgiving holiday. Equities benchmarks advanced in Japan, South Korea and Hong Kong while mainland Chinese gauges fell.

The moves in China came as investors weighed the impact of record Covid-19 cases against signs of loosening monetary conditions. Official comments broadcast Wednesday indicated the People's Bank of China would allow banks to reduce capital reserves to stimulate growth.

China's Covid-zero policy has had "a significant effect on consumption" while the property crisis is "affecting investment in the sector and affecting property developers," Gita Gopinath, first deputy managing director for the International Monetary Fund, said in an interview with Bloomberg Television.

Government bond yields edged lower in Australia and New Zealand after Treasury yields fell Wednesday along with the dollar. A gauge of the greenback slid further Thursday, taking declines into a third day. There was no trading in Treasuries due to the US holiday.

Minutes from the Fed gathering earlier this month indicated several officials backed the need to moderate the pace of rate hikes, even as some underscored the need for a higher terminal rate.

This adds weight to expectations the central bank will raise rates by 50 basis points next month, ending a run of jumbo 75 basis point increases. Data Wednesday also showed US business activity contracted and unemployment applications rose as the economy cools.

Oil fell as the European Union considered a higher-than-expected price cap on Russian crude and signs of a global slowdown increased.

Gold rose for a third day on the Fed minutes. The precious metal has been hurt by the US central bank's aggressive monetary-tightening policy to curb inflation, which has pushed up bond yields and the dollar and in turn sent bullion tumbling about 16% from its March peak.

Bill Ackman, founder of hedge fund Pershing Square Capital Management LP, said he's betting against the Hong Kong dollar and its peg with the greenback.

Pershing owns a "large notional position" in Hong Kong dollar put options -- bearish wagers on the currency -- he said in a tweet, adding that the peg no longer made sense for Hong Kong.

The South Korea won rallied as much as 2% after the nation's central bank governor said some policy members wanted a higher terminal rate. The won and its emerging Asian peers also gained on the Fed rate outlook.

Key events this week:

  • ECB publishes account of its October policy meeting, Thursday

  • US stock and bond markets are closed for the Thanksgiving holiday, Thursday

  • US stock and bond markets close early, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.2% as of 6:47 a.m. London time. The S&P 500 climbed 0.6%

  • Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 1%

  • The Topix Index rose 1.2%

  • The S&P ASX Index rose 0.1%

  • The Hang Seng Index rose 0.6%

  • The Shanghai Composite Index fell 0.3%

  • Euro Stoxx 50 futures were little changed

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%

  • The euro rose 0.4% to $1.0436

  • The Japanese yen rose 0.6% to 138.82 per dollar

  • The offshore yuan rose 0.1% to 7.1448 per dollar

  • The British pound rose 0.3% to $1.2092

Cryptocurrencies

  • Bitcoin rose 1.2% to $16,676.72

  • Ether rose 2.9% to $1,202.77

Bonds

  • The yield on 10-year Treasuries fell six basis points to 3.69% Wednesday

  • Australia's 10-year yield declined four basis points to 3.54%

Commodities

  • West Texas Intermediate crude fell 0.7% to $77.41 a barrel

  • Spot gold rose 0.3% to $1,754.50 an ounce

This story was produced with the assistance of Bloomberg Automation.

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