Global stocks, US stocks gain; a stronger dollar weighs on commodities

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WASHINGTON/LONDON, Oct 28 (Reuters) – Global stocks rallied and Wall Street rose on Friday on strong U.S. data and hopes of a slowdown in rate hikes from some central banks , as commodity prices were hit by a stronger US dollar.

The European STOXX index (.STOXX) was down 0.11% at 10:36 a.m. ET (2:36 p.m. GMT). Thursday’s weak forecast from Amazon.com sent Europe’s tech sector plummeting (.SX8P) and the prospect of new COVID restrictions in China has hit mining and oil companies. (.SXPP)

But the Dow Jones Industrial Average (.DJI) rose 1.62%, the S&P 500 (.SPX) gained 1.23% and the Nasdaq Composite (.IXIC) rose 1.2% with gains from Apple on upbeat results offsetting Amazon’s dour warning.

MSCI’s main global index, which tracks 47 countries (.MIWD00000PUS)reversed course to 0.49% higher at the end of a week as investors navigated a mixed bag of earnings and approaching economic data.

In bond markets, borrowing costs jumped as stronger-than-expected inflation data from France, Germany and Italy put renewed emphasis on rising prices. Still, what analysts had described as a dovish ECB meeting on Thursday meant German 10-year Bund yields were set for a weekly decline.

Consumer spending in the United States rose more than expected in September, while underlying inflationary pressures continued to build, keeping the Federal Reserve on track to raise interest rates by 75 basis points for the fourth time this year.

“The Federal Reserve has yet to break the persistent trend in underlying inflation and so is likely to remain aggressive at next week’s meeting,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, Massachusetts. North Carolina.

“However, some sectors of the economy are showing significant weakness and may warrant the Fed downgrading to lower rate hikes in 2023.”

The yen appreciated by 0.85% against the dollar. Earlier, it weakened after the Bank of Japan Governor Haruhiko Kuroda said he had “no plans to raise interest rates or head for an exit (from ultra-low interest rates) any time soon” despite rising inflation expectations.

Sharp falls in China meant stocks in Asia-Pacific (.MIAP00000PUS) closed down 1.65% at 135 points, just above a 2.5-year low reached on Monday.

Record drop for US tech giants

DOVES AND BLUE BIRDS

The widely anticipated decision by the BOJ in Asian trading to maintain its loose policy came less than 24 hours after the European Central Bank raised interest rates by 75 basis points, but said “substantial” progress had already been made in tackling inflation.

Investors are now turning their attention to the Fed meeting next week.

“I don’t think there will be any surprises here (in terms of rate hikes), but it will be more about the message the Fed will deliver,” said Frank Benzimra, head of Asia equity strategy at Societe Generale.

The less hawkish comments from the ECB bolstered expectations that central banks will need to ease the pace of monetary tightening, especially after the Bank of Canada announced a lower-than-expected rate hike on Wednesday.

Markets have started trading on expectations that the Fed will slow its aggressive pace of rate hikes.

“No Powell Pivot, no Santa?” Emerging economy analysts at Citi asked, referring to the so-called “Santa Claus rally” that markets often see towards the end of the year.

In China, the stock market (.SSEC) fell 2.25%, along with Hong Kong’s Hang Seng Index (.HSI) down 3.6%, rounding off a tough week. Dismal industrial earnings numbers and widening COVID-19 outbreaks all weighed on sentiment.

The US dollar appreciated against a basket of other major currencies, leaving the euro below parity again, although the pound sterling appreciated. /FRX

The stronger dollar put pressure on commodities traded in dollars, making them more expensive for holders of other currencies.

Oil prices extended losses as China widened its COVID restrictions, fueling demand concerns. Brent crude futures fell 1.1% and US crude prices fell nearly 1%.

Spot gold prices fell 1.24%. GL

Reporting by Chris Prentice; Editing by Kirsten Donovan


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