European stocks gained and the dollar fell after Federal Reserve meeting minutes showed support for more moderate interest-rate increases.
(Bloomberg) — European stocks gained and the dollar fell after Federal Reserve meeting minutes showed support for more moderate interest-rate increases.
The Stoxx Europe 600 Index rose 0.3% as the real estate sector outperformed, boosted by the prospects of slower rate hikes and analyst upgrades.
Trading volumes are expected to be lower due to the Thanksgiving holiday, which will mean no cash US equity market trading. Wall Street futures were up after the S&P 500 closed at a two-month high Wednesday.
Asia’s equities benchmark climbed.
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.
“It was the start of a more different and dovish narrative from the Fed,” said Sunaina Sinha Haldea, global head of private capital advisory at Raymond James.
“Is it a pivot? No, but are we seeing a slowdown in rate hikes and that path downwards towards rate cuts coming through? Yes. I think we will look back and say this was the peak of it.”
Data Wednesday also showed US business activity contracted and unemployment applications rose as the economy cools.
A gauge of dollar strength fell further Thursday, taking declines into a third day.
There is no trading in Treasuries due to the US holiday.
Oil slipped 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.
In Asian trading, mainland Chinese stocks underperformed 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.
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.
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
- The Stoxx Europe 600 rose 0.3% as of 9:34 a.m.
London time
- Futures on the Nasdaq 100 rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index rose 1.5%
- The MSCI Emerging Markets Index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0416
- The Japanese yen rose 0.6% to 138.70 per dollar
- The offshore yuan rose 0.2% to 7.1403 per dollar
- The British pound rose 0.2% to $1.2080
Cryptocurrencies
- Bitcoin rose 0.7% to $16,587.35
- Ether rose 2.7% to $1,200.38
Bonds
- The yield on 10-year Treasuries was little changed at 3.69%
- Germany’s 10-year yield declined nine basis points to 1.84%
- Britain’s 10-year yield declined nine basis points to 2.92%
Commodities
- Brent crude fell 0.4% to $85.08 a barrel
- Spot gold rose 0.4% to $1,756.51 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Allegra Catelli and Richard Henderson.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
