Stocks turn ahead of Fed minutes as oil falls on price cap plan

  • Fed Minutes for November at 7:00 p.m. GMT
  • American Thanksgiving holiday on Thursday
  • Stocks Make Smart Gains Globally
  • Eurozone economic data point to recession
  • China hit by rising COVID-19 infections

LONDON, Nov 23 (Reuters) – Global stocks rebounded on Wednesday ahead of minutes of a Federal Reserve meeting that could shed light on whether the U.S. central bank plans to moderate interest rate hikes. ‘interest.

Crude oil prices fell as the Group of Seven (G7) countries eyed a price cap of $65 to $70 a barrel of Russian oil, above the current level of crude quality.

Wall Street was poised for a soft start, with little big business news to boost trading ahead of the U.S. Thanksgiving holiday on Thursday, when markets are closed.

The Fed has raised rates sharply this year in a bid to rein in soaring inflation, and New Zealand’s central bank earlier on Wednesday raised interest rates by a record 75 basis points to 4 .25%, a harbinger of more likely hikes from the Federal Reserve, Central European Bank and Bank of England next month.

“We expect the Fed to be probably closer to the end of the rate hike cycle than the beginning, certainly since the rate hikes are largely behind them,” said analyst Mike Hewson. Chief Markets Officer at CMC Markets.

The MSCI All Country Stock Index (.MIWD00000PUS) rose 0.16%, although it was still down about 18% for the year.

In Europe, the STOXX Index (.STOXX) of 600 companies rose 0.3%, leaving around 10% for 2022.

David Bizer, managing partner at investment manager Global Customized Wealth, said investors were being guided by what they thought the Fed would do next as signs of a slowing U.S. economy became clearer.

“The overall market appreciation in the fourth quarter is driven by this belief that the Fed is waking up to the fact that the pace and magnitude of its rate hikes could have a near-term conclusion. This gives markets reassurance that this is going to be the end,” Bizer said.

The slowdown in eurozone business activity eased slightly in November, but aggregate demand continued to fall as consumers cut spending amid a cost-of-living crisis, the data showed, adding to the evidence that the monetary bloc is entering a recession.

“The result dispels fears of a severe recession and is consistent with a mild technical recession at the start of the year,” ING Bank said in a note to clients.

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

Reuters Charts

COVID RESTRICTIONS

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

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

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

“We had seen Chinese markets climb up to 20%, but those expectations are lowered, we believe a reopening will be a slower process and not rushed.”

China reported 29,157 new COVID infections for November 1 on Wednesday. 22, down from 28,127 new cases a day earlier. The number of cases in Beijing and Shanghai is rising steadily and remains high in several major manufacturing and export hubs, prompting authorities to close some facilities.

The benchmark 10-year Treasury yield traded at 3.7799% from its US close of 3.758% on Tuesday.

The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 4.5434% from a US close 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 single currency euro edged up 0.17% to $1.032.

“The US dollar has lost some of its recent gains (as) central bankers’ consensus on the magnitude of interest rate hikes unravels,” wrote Commonwealth Bank analyst Tobin Gorey.

Oil prices rose slightly, with data showing a bigger-than-expected drop in U.S. crude last week, outweighing concerns about lower fuel demand from China.

U.S. crude reversed earlier gains to fall 2.5% to $78.92 a barrel, while Brent crude lost 2.4% to $85.99 a barrel.

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

As the collapse of the FTX exchange continues to rock the cryptocurrency markets, Bitcoin rose 2% to $16,483.

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

Our standards: The Thomson Reuters Trust Principles.

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