Global Markets Report - 24 November
Australian shares are set to open higher.
Australia
Australian shares are set to edge higher after US stocks rose Wednesday as minutes from the Federal Reserve's latest meeting showed most officials favored slowing interest-rate increases soon.
ASX futures were up points or 0.09% at 7256 as of 7:00am on Thursday, pointing to a green open.
The S&P 500 gained 0.6%, while the Dow Jones Industrial Average added 0.3%, or roughly 130 points. The Nasdaq Composite added 1%.
The Fed this year has been boosting interest rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high. The central bank at its meeting early this month raised interest rates by a fourth consecutive 0.75 percentage point.
US stocks have mounted a turnaround lately amid expectations that the Fed will raise interest rates by a smaller amount in December than it has for the past four meetings. Futures markets show that some 78% of investors believe that the central bank will raise interest rates by a milder 0.5 percentage point.
"A substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate," the minutes said.
In commodity markets, Brent crude oil sank 3.5% $US85.24 a barrel, gold gained 0.6% to US$1,751.26.
In local bond markets, the yield on Australian 2 Year government bonds rose to 3.16% while the 10 Year was flat at 3.59%. Overseas, the yield on 2 Year US Treasury notes rose to 4.49% and the yield on the 10 Year US Treasury notes dropped at 3.71%.
The Australian dollar hit 67.30 US cents up from the previous close of 66.48. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 99.
Asia
Chinese stocks ended mixed, extending a muted trading pattern so far this week, as investors weighed the impact of expanding Covid outbreaks across the country. The benchmark Shanghai Composite Index extended its slight uptrend from the last session, edging up 0.3% to 3096.91. The other two major indexes both fell, with the Shenzhen Composite down 0.3% at 1995.51 and the ChiNext Price Index losing 0.1% to 2340.34.
Hong Kong stocks ended the session higher, recovering from a five-session losing streak as tech and property shares gained. The benchmark Hang Seng Index rose 0.6% to settle at 17523.81. Chinese tech giants led the upturn, after both Kuaishou and Baidu beat expectations with their latest quarterly earnings results. Kuaishou jumped 5.7%, Baidu added 3.4%, and JD.com gained 3.3%.
Japanese stock markets are shut for Workers’ Day.
Europe
European stocks rose as investors await details of the US Federal Reserve's thinking surrounding its latest interest-rate rise.
The pan-European Stoxx Europe 600 gains 0.5%, the English FTSE 100 and French CAC 40 advanced about 0.2% and the German DAX traded flat.
"Having got off to an initially positive start, with the FTSE 100 getting to within touching distance of 7500, it's been a fairly lackluster session as investors weigh up the release of tonight's FOMC minutes against a backdrop of a weakening economic outlook, after PMIs all pointed to further economic weakness in 4Q," CMC Markets analyst Michael Hewson wrote.
North America
US stocks rose Wednesday as minutes from the Federal Reserve's latest meeting showed most officials favored slowing interest-rate increases soon. The S&P 500 gained 0.6%, while the Dow Jones Industrial Average added 0.3%, or roughly 130 points. The Nasdaq Composite added 1%.
The Fed this year has been boosting interest rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high. The central bank at its meeting early this month raised interest rates by a fourth consecutive 0.75 percentage point.
US stocks have mounted a turnaround lately amid expectations that the Fed will raise interest rates by a smaller amount in December than it has for the past four meetings. Futures markets show that some 78% of investors believe that the central bank will raise interest rates by a milder 0.5 percentage point.
"A substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate," the minutes said.
James Athey, investment director at Abrdn, said a string of central-bank speeches in recent weeks -- during which some officials have expressed increasing comfort with a smaller interest-rate increase in December -- has also helped give investors confidence that ultra-aggressive Fed action might be in the rearview mirror.
Mr. Athey added that he expects future speeches will still be focused on "trying to manage the message and manage euphoria within financial markets by still describing a lot of work to do. That there's a need to get rates higher than they are currently, that inflation is not defeated yet."
Investors also parsed several economic readings. Wednesday morning data from the Labor Department showed jobless claims increased from the previous week but stayed relatively low. Consumer sentiment fell from the month prior, but came in higher than economists expected, according to the University of Michigan's November consumer survey released Wednesday.
Investors are also keeping an eye on rising Covid-19 cases in China, which are challenging recent moves by the government to ease pandemic restrictions.
Trading volume has been thinner than usual this week as investors step away from their desks before the Thanksgiving holiday.
Among individual companies, shares of Deere & Co. led gainers in the S&P 500. The farm-equipment company reported an increase in sales as supply constraints eased and shipments rose. The stock was up 5.6%.
Manchester United shares jumped 22% after its owners said Tuesday they were exploring a sale.
US-listed shares of Credit Suisse fell 6.2% after the Swiss bank warned it was headed for a roughly $1.6 billion loss in the fourth quarter after customers pulled their investments and deposits over concerns about the bank's financial health.
Nordstrom's shares slid 4.2% after the company reported a fall in quarterly net sales and said it is working to clear out its excess inventory.