World stocks hit five-week peak, as dollar continues retreat

WASHINGTON/LONDON, October 26. (Reuters). Global stocks rose to a five-week high on Wednesday as U.S. stocks were mixed and investors weighed disappointing earnings from U.S. heavyweights on hopes the Federal Reserve will slow its aggressive rate hike. raising rates.

The US dollar index fell to a five-week low as the pound hit its highest level since September 13, extending its gains after Rishi Sunak became Britain’s prime minister.

News that the British government’s plan to fix the country’s public finances will be delayed by more than two weeks to November 17 sent bond yields higher.

Wall Street was mixed. The Dow Jones Industrial Average (.DJI) rose 0.51%, the S&P 500 (.SPX) lost 0.13% and the Nasdaq Composite (.IXIC) fell 0.97% as of 10:37 a.m. EDT (1437 GMT).

MSCI’s index of world shares (.MIWO00000PUS) rose 0.36% to hit a five-week high. Europe’s Stoxx 600 (.STOXX) also hit a five-week high.

Google owner Alphabet ( GOOGL.O ) posted weaker-than-expected ad sales after Tuesday’s close, while Microsoft ( MSFT.O ) missed revenue guidance and a warning from Dutch semiconductor supplier ASM ( ASMI.AS ) raised concerns about a slowing economic growth. .

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Some of Europe’s biggest banks have warned of growing risks of the economy collapsing after bigger-than-expected profits, fueled by a trading boom in volatile markets and higher interest rates. Deutsche Bank ( DBKGn.DE ) posted a better-than-expected jump in third-quarter profit, while Britain’s Barclays ( BARC.L ) also beat profit forecasts.

Asian stocks rose, suggesting some investors are taking comfort in the realization that a turnaround in the global rate-hike cycle may be near.

While the Fed is widely expected to raise another 75 basis points in November, the sense that the Fed may begin to slow its aggressive tightening cycle lifted equity markets and took the edge off the dollar’s rally.

“I don’t want to deviate too much from optimism. We believe that it is too early for the Fed to make a significant turn, and the stronger the markets, the more likely the Fed wants to be more cautious. turnaround,” said Andrew Sheets, chief strategist at Morgan Stanley.

Sheets also noted an “increased risk of revenue decline.”

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Data on Tuesday showed slowing home price growth and a dip in consumer confidence, with some signs that the Fed’s aggressive rate hikes are starting to cool the labor market.

“I think it’s too early to declare the all-clear for equity markets — for example, the Fed may push US real interest rates deeper into restrictive territory — meaning we view this decline in the dollar as corrective,” Chris said. Turner, ING’s global head of markets.

Meanwhile, the Bank of Canada announced a smaller-than-expected rate hike of 50 percentage points. That left its policy rate at 3.75%, a 14-year high, but another 75 basis points short of a bid to stem stubbornly high inflation.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose more than 1%, while Japan’s Nikkei (.N225) hit its highest level since Sept. 20.

The euro rose above $1 for the first time in five weeks.

In Australia, inflation hit a 32-year high last quarter as house building and gas prices rose. The surprise has increased pressure on the central bank to reverse its recent turnaround, although markets are skeptical that there will be any dramatic changes.

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The Australian dollar rose more than 1%.

China’s yuan rebounded sharply to close the domestic session at its highest level in two weeks as traders and corporate clients scrambled to liquidate long dollar positions.

Market participants turned cautious after major state-owned banks were seen selling the dollar on Tuesday to stabilize the market, traders said.

November 3 investors raised bets that the Bank of England would raise its key interest rate by a full percentage point, putting the odds of such a move at about 37% higher than before the delay was announced.

Gold prices jumped as the dollar weakened and bond yields fell. Spot prices rose by 0.82%.

Elsewhere, oil prices rose on a weaker dollar and supply concerns. US oil price rose $2 per barrel.

Reporting by Dhara Ranasinghe; Additional reporting by Ankur Banerjee in Singapore; Edited by Kim Coghill and David Holmes

Our Standards: The Thomson Reuters Trust Principles.

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