RECASTS, UPDATES throughout, CHANGES dateline
Asian and European stock markets mostly fell Tuesday as investors awaited minutes from the US Federal Reserve’s most recent meeting for a steer on interest rates in the world’s biggest economy.
The Fed will later publish minutes from its November gathering, when policymakers held rates, and investors will analyse comments from officials.
Investors are becoming increasingly optimistic that the US central bank is finished hiking rates, with expectations growing that financial conditions will become easier in the new year as inflation comes down.
That has fanned a rush back into risk assets in recent weeks and also pushed the dollar down against its peers.
“Traders will scrutinise the minutes closely, hoping to find clues for the timing of the next Fed move, which is now widely assumed to be a cut,” said ActivTrades senior analyst Ricardo Evangelista.
“Against this background, dovish minutes could bring forward the market’s expectations for when the Fed will begin cutting rates and trigger further dollar weakness.”
Investors will also pay close attention to earnings from US retailers Best Buy and Lowe’s ahead of the peak-demand Christmas shopping season.
New York’s three main indices extended their gains Monday, with the Nasdaq hitting a 22-month high thanks to an advance in tech giants including Amazon, Microsoft and Nvidia.
The rally was boosted by the successful sale of 20-year US Treasuries that sent yields on other notes lower. Talk is now growing that the Fed could cut borrowing costs as early as March, much earlier than previous bets on the second half of 2024.
Asian markets started Tuesday on the front foot but ran out of gas as the day progressed.
Hong Kong dipped even after market heavyweight Alibaba jumped more than two percent to extend its rebound after diving 10 percent Friday on news it had cancelled the spinoff of its cloud computing arm.
Tokyo, Singapore, Jakarta and Wellington also fell, while Shanghai was flat. Sydney, Seoul, Mumbai, Taipei, Bangkok and Manila were all up.
In Europe, London and Paris both retreated somewhat while Frankfurt edged upwards.
World oil prices stagnated as traders awaited this Sunday’s upcoming output meeting of OPEC+ crude-producing nations.
“The main question the market is asking is whether OPEC will cut production further in response to softening oil prices,” noted Economist Intelligence Unit analyst Matt Sherwood.
“These have returned to the levels they were at before the Israel-Hamas war broke out in early October.”
Wall Street is expected to be subdued for the rest of the week owing to the Thanksgiving holiday long weekend, with US markets closed on Thursday and finishing early on Friday.
London – FTSE 100: DOWN 0.4 percent at 7,464.66 points
Paris – CAC 40: DOWN 0.2 percent at 7,235.10
Frankfurt – DAX: UP 0.2 percent at 15,930.48
EURO STOXX 50: FLAT at 4,340.83
Tokyo – Nikkei 225: DOWN 0.1 percent at 33,354.14 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 17,733.89 (close)
Shanghai – Composite: FLAT at 3,067.93 (close)
New York – Dow: UP 0.6 percent at 35,151.04 (close)
Euro/dollar: UP at $1.0947 from $1.0940 on Monday
Pound/dollar: UP at $1.2534 from $1.2505
Dollar/yen: DOWN at 147.71 yen from 148.39 yen
Euro/pound: UP at 88.38 pence from 88.50 pence
Brent North Sea crude: DOWN 0.2 percent at $82.19 per barrel
West Texas Intermediate: DOWN 0.1 percent at $77.72 per barrel