© Reuters. Visitors walk past Japan’s Nikkei stock price ticker board inside a conference room in Tokyo, Japan, September 14, 2022. REUTERS/Issei Kato/Files
by Marc Jones
LONDON (Reuters) – Bulls were in command ahead of the first meetings of the year between the European Central Bank and the Bank of England on Thursday, after the U.S. Federal Reserve reinforced the view that raising interest rates global was close to coming to an end.
Fed Chairman Jerome Powell’s message that a “disinflationary” process was taking hold had sent Wall Street rising, the dollar lower and holding European stocks 0.5% higher as the BoE loomed. and the ECB. ()
Both are expected to raise their main rates by 50 basis points, but as with the Fed, the focus will be on what they do from here.
The usual pre-meeting lull left the euro up just 0.1% and the pound looking dopey, though the gap between US 10-year bond yields (PVB/EUR)
Dirk Schumacher, head of European macroeconomic research at Natixis, said both the Fed and the BoE were now effectively at the “fine-tuning” point, while the ECB still had more ground to cover having started its hikes later.
“The question is really how much is left to come,” Schumacher said. “These are difficult waters and some guidance is what the markets are looking for.”
Away from the central bank’s action, there was more drama in India when one of its biggest firms, Adani, was forced to cancel a long-planned $2.5bn share offering in the wake of allegations, denied by the firm, of hidden debt and shares. handling.
The group’s flagship firm, Adani Enterprises, plunged 10%, taking the broader group’s overall losses since the scandal broke to more than $100 billion.
Elsewhere, however, it did not derail optimism that slowing, halting, and eventually lowering interest rates in major economies will avert a major economic slowdown.
MSCI’s broader index of global stocks, which covers 47 countries, rose 0.25 and just hit a nearly six-month high.
Wall Street’s overnight rally got a further boost from a $40bn Meta share buyback plan that lifted tech stocks elsewhere, with Asia-Pacific stocks closing up 0.2%.
That index is now up nearly 30% since October thanks to China dropping many of its COVID-19 restrictions.
GRAPH: The race to raise rates (https://www.reuters.com/graphics/CANADA-CENBANK/dwvkdeaqopm/chart.png)
BOE, ECB AND RESULTS
The Fed’s 25 basis point interest rate hike on Wednesday came after a year of further increases. Although his statement said policymakers expected “continued increases” going forward, traders jumped on Powell’s “disinflationary” view. (.NORTH)
Ali Hassan, a portfolio manager and managing director at Thornburg Investment Management, said Powell had also apparently shrugged loosening financial conditions as a concern at his news conference. “This was a green light that the market could buy without feeling like they’re fighting the Federal Reserve.”
Europe’s focus now is on the ECB and BoE meetings and the paths those two central banks are likely to take.
Strategists at Saxo Markets said the ECB had recently outperformed its hawkish peers and was likely to do so again this week. The BoE will be the hardest to predict given undecided market prices and the margin for a split vote, they said.
US earnings season is also in full swing.
Facebook (NASDAQ:) owner Meta was poised for a raise after his after-hours buyback news. Nasdaq futures rose 1% with gains from internet and technology giants Apple (NASDAQ:) and Amazon (NASDAQ:) also due later.
In the currency market, the dollar soared lower on Powell’s remarks, with the , which measures the currency against six major pairs, falling to a new nine-month low of 100.80. It was the last one at 101.50.
The euro fractionally rose to just under $1.10. The yen stalled at 128.97 to the dollar, while sterling eased to $1.2337, down 0.3% in the morning.
In commodities, oil stabilized, having rallied on the back of the weak dollar, while gold added 0.2% to $1,953.44 an ounce, having touched a nine-month high of $1,957 an ounce. ounce before.
it was at $82.85, unchanged on the day, while West Texas Intermediate (WTI) was sitting at $76.44 a barrel. (EITHER)
