US and European stocks rise; dollar retreats

WASHINGTON/LONDON, Oct 25 (Reuters) – Wall Street continued to rise on Tuesday as weak data fueled hopes the Federal Reserve will slow its aggressive pace of rate hikes and European stocks hit their all-time high. level in a month with better than expected earnings offsetting economic worries.

The US Dollar Index gave up its modest gains in the session to ease against a basket of major currencies, giving commodities a boost. It was last down 0.8%.

The Dow Jones Industrial Average (.DJI) rose 0.66%, the S&P 500 (.SPX) gained 1.04% and the Nasdaq Composite (.IXIC) gained 1.57% as of 10:57 a.m. EDT ( 14:57 GMT).

The European STOXX 600 Index (.STOXX) extended earlier gains, up 1.18%. The main European index MSCI (.MSER) ​​rose 1.57% and touched its highest level since mid-September.

The MSCI World Equity Index, which tracks stocks from nearly 50 countries, was up on the day (.MIWD00000PUS).

Swiss bank UBS (UBSG.S) was among those that beat market expectations. However, Europe’s biggest bank, HSBC (HSBA.L), fell after reporting a 42% drop in third-quarter profits.

Tech giants Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O) release results later today.

U.S. consumer confidence fell in October after two consecutive monthly increases amid growing concerns about inflation and a possible recession next year, according to a survey released on Tuesday. Read more

Case-Shiller US housing data in August was weaker than expected.

“Much (of last week’s rally) is based on a potential Fed slowdown. Housing data this morning is another example that bad news for the economy is good news for the stock market” , said Chris Zaccarelli, Chief Investment Officer. leader of Independent Advisor Alliance in Charlotte, North Carolina.

Asian stocks struggled to make gains on uncertainty over whether President Xi Jinping’s new leadership team would prioritize economic growth in China, where the onshore yuan ended the domestic session with its weakest closing since the end of 2007.

The European Central Bank meets on Thursday and is expected to raise rates by 75 basis points.

The British pound rose 1.55% to $1.1458. On Monday, Britain’s currency recovered from session lows and gilt yields fell sharply in a sign of relief for investors when former finance minister Rishi Sunak was named the next prime minister. But analysts said investor confidence in the ruling Conservative Party’s ability to manage the economy was still shaken.

Eurozone government bond yields fell, with Germany’s benchmark 10-year yield trading at 2.308%.

German business sentiment fell slightly in October, but the data still beat analysts’ estimates.

The data “suggests that at least business sentiment is bottoming out,” Carsten Brzeski, global head of macro at ING, said in a client note. “However, this does not mean that an improvement in the economy is near.”

Business activity in the United States contracted for a fourth consecutive month, data showed on Monday, suggesting that Fed rate hikes have weakened the economy, raising hopes that the bank central could begin to slow the pace of increases.

Hani Redha, portfolio manager at Pinebridge Investments, said some investors were relieved by “some hope that the pace of central bank tightening may start to slow later this year.”

Economists polled by Reuters said the central bank is unlikely to stop until inflation falls to about half its current level.

Pinebridge’s Redha said earnings estimates had fallen slightly in recent months, but the pace of that had been “fairly modest”.

“The potential relief investors are feeling as the end of the bull cycle nears, which appears to be outweighing the steep decline in earnings estimates.”

The weakening greenback boosted commodities, making them cheaper for holders of other currencies. Spot gold prices traded higher as investors’ eyes were on the Fed. Spot gold was up 0.4% for the last time.

Oil prices also reversed losses to rise $1 a barrel on a weaker dollar and supply issues.

Reporting by Elizabeth Howcroft in London and Chris Prentice in Washington Editing by Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and money that generates “Web3”.

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