Global stocks fall, US dollar eases as investors fear aggressive US Fed rate hike | The Financial Express

Global stocks fall, US dollar eases as investors fear aggressive US Fed rate hike

The U.S. central bank is expected to announce a fourth three-quarters of a percentage point increase, part of its effort to bring down inflation.

Global stocks fall, US dollar eases as investors fear aggressive US Fed rate hike
Analysts said uncertainty over how economic data would pan out meant a dovish pivot could still be some way off.

Global stock indexes fell and the dollar was slightly lower against other major currencies on Wednesday ahead of what is expected to be another aggressive interest rate hike from the U.S. Federal Reserve later in the day. U.S. Treasury yields were little changed.

The U.S. central bank is expected to announce a fourth three-quarters of a percentage point increase, part of its effort to bring down inflation. The policy statement from the bank’s Federal Open Market Committee (FOMC) is due at 2 p.m. EDT (1800 GMT).

The Fed has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%. The key question for some market participants is whether the Fed will also signal it could slow additional rate hikes, in a so-called dovish pivot.

Also Read: US stocks: Futures subdued ahead of Fed rate decision

Analysts said uncertainty over how economic data would pan out meant a dovish pivot could still be some way off.

Data on Tuesday showed U.S. private payrolls increased more than expected in October. It followed a report on Tuesday that showed a jump in U.S. monthly job openings, also supporting the case for the Fed to remain hawkish. “The typical calm before the FOMC storm is what we’re seeing this morning, across all asset classes really,” said Michael Brown, head of market intelligence at payments firm Caxton in London.

In currencies, the euro was 0.11% higher against the dollar at $0.9885, while against the Japanese yen, the dollar fell 0.8% to 147.03 yen.

A Reuters poll found currency strategists thought the dollar’s retreat was temporary.

The Dow Jones Industrial Average fell 93.27 points, or 0.29%, to 32,559.93, the S&P 500 lost 17.14 points, or 0.44%, to 3,838.96 and the Nasdaq Composite dropped 71.06 points, or 0.65%, to 10,819.79.

The pan-European STOXX 600 index lost 0.10% and MSCI’s gauge of stocks across the globe shed 0.21%.mTreasury yields were little changed in the hours before the Fed news.

The yield on benchmark 10-year Treasury notes was above 4%, while two-year yields, which typically moves in step with interest rate expectations, was above 4.5%. U.S. crude recently rose 0.44% to $88.76 per barrel and Brent was at $95.03, up 0.4% on the day.

Earlier, upbeat remarks by Chinese regulators about policy support and rising expectations among investors about easing of strict COVID-19 measures boosted sentiment in its market.

Bank of Japan Governor Haruhiko Kuroda said on Wednesday a tweak to the central bank’s yield curve control policy, which has contributed to the weakness in the yen, could become a future option.

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First published on: 02-11-2022 at 21:48 IST