Global Markets – The US dollar is at its lowest level since September, and global stocks are gaining
The US dollar falls to its lowest levels since early September
Fed minutes, European PMI, and Nvidia results this week
Japanese stocks are touching their highest levels since the 1990s
(Adds new prices throughout market commentary, paragraphs 8-9)
Written by Chris Prentice and Wayne Cole
NEW YORK/SYDNEY (Reuters) – The U.S. dollar fell to its lowest level in more than two months on Monday on expectations that U.S. interest rates will peak as global stocks rise.
Closely-watched US Treasury bond yields fell after the auction, while global oil futures rose $2 on the prospect of a supply cut.
The MSCI World Equity Index was up 0.72% by 2:41 PM EST (1941 GMT).
The European STOXX index rose 0.1 percent, with energy stocks leading the gains. The health care sector fell after Bayer shares fell to their lowest levels in 14 years.
On Wall Street, the Nasdaq index led gains, with Microsoft shares reaching record levels. The technology-heavy index rose 1.09% to 14,279.87, the Dow rose 0.62% to 35,163.86 and the S&P 500 advanced 0.76% to 4,548.22.
The dollar index fell to 103.26, its weakest level since the beginning of September, as investors appeared to boost their bets that the Federal Reserve may start cutting interest rates next year.
Japanese stocks hit their highest levels since 1990, thanks to strong earnings and overseas demand that fueled a three-week winning streak. The Nikkei saw profit taking but remains up 8.2% for the month so far, with the Topix not far behind.
Trading was expected to be quiet for most of the week ahead of the US Thanksgiving holiday on Thursday. Black Friday sales will test the pulse of the consumer-driven US economy this week.
“The historical pattern over the past five years suggests that a short holiday week typically enjoys modest gains,” said Quincy Crosby, chief global strategist at LPL Financial.
However, with concerns about the resilience of consumer spending, the market could be affected by any indication that Black Friday does not see crowds of consumers searching for deals, or indications that the start of Cyber Monday will not lead to billions of dollars being spent. Online”.
The minutes from the Federal Reserve’s latest meeting will provide some color on policymakers’ thinking as they kept interest rates steady for the second time.
“The cautious meeting minutes may raise some downside risks for the dollar,” said Ricardo Evangelista, chief analyst at Active Trades.
Signs of progress in the battle against inflation in the United States have led to a rebound in stocks this year as investors hope for an end to the cycle of interest rate hikes that have been the main tool for policymakers to combat commodity price increases.
“We expect giant technology stocks to continue to outperform given their superior expected sales growth, margins, reinvestment ratios and balance sheet strength,” Goldman Sachs analysts said in a note. “But the risk/reward profile is not particularly compelling given the high expectations.”
Technology leader Nvidia reports its quarterly results on Tuesday, and all eyes will be on the state of demand for its AI-related products.
Its price is great
Markets have priced in the risk of US interest rates rising again in December or next year.
The yield on the benchmark 10-year Treasury bond rose to 4.4237% compared to Friday’s close of 4.441%.
There was relief in Europe for some of the affected sovereign names, as the risk premiums required by investors to hold Italian and Portuguese debt fell after rating agency Moody’s updated its outlook on the two countries.
It raised the outlook for Italy from negative to stable, and pushed Portugal’s long-term issuer rating up two notches to A3 from Baa2, narrowing spreads on both bonds compared to benchmark 10-year German bonds in the region.
Closely watched surveys of European manufacturing are scheduled for this week. Any sign of weakness will encourage more bets on early interest rate cuts from the European Central Bank.
“These surveys will be very important on the Eurozone services sector given the sharp deterioration we have seen recently,” NAB analysts said.
Markets are implying a 70% chance of easing as soon as April, although many ECB officials are still talking about the need to keep policy tight.
The Riksbank meets this week and may raise interest rates again, given rising inflation and a weak currency.
In commodities, oil rose amid speculation that OPEC+ will extend or increase production cuts at its meeting on November 26.
Brent crude rose 2.18% to $82.37 per barrel, and US crude added 2.12% to $77.50.
The settlement price for gold futures contracts decreased by 0.22% to $1,980.30 per ounce. Spot prices fell 0.12% to $1,977.73
(Reporting by Chris Prentice in New York, Wayne Cole in Sydney and Lawrence White in London; Editing by Lincoln Feast, Susan Fenton, Will Dunham, Sharon Singleton and Andrew Heavens)