Wall Street stocks gain as investors cheer on Fed minutes

Shares on Wall Street closed higher on Wednesday after minutes from the Federal Reserve’s latest policy meeting suggested the U.S. central bank may ease its efforts to raise interest rates.

The S&P 500 index ended the session up 0.6%, while the tech-heavy Nasdaq Composite gained 1% after ending the previous day up 1.4%.

The moves came as minutes from the U.S. central bank’s early November meeting showed a “substantial majority” of officials backed a rapid slowdown in interest rate hikes – although some warned that monetary policy should be tightened more than expected next year.

In government bond markets, the yield on the 10-year US treasury – considered a proxy for global borrowing costs – slipped 0.06 percentage points to 3.7%. The policy-sensitive two-year yield fell 0.03 percentage points to 4.48%. Both yields, which move inversely to debt prices, had been broadly flat before the minutes were released.

The dollar fell further after the release of the minutes, with an index following the US currency against six peers slipping 0.9%.

Stocks and bonds have come under pressure this year as the Fed and its international peers turn the screw on monetary policy in an effort to rein in rapid price growth. Even after a weaker-than-expected US inflation reading for October, markets are heeding interest rate expectations in the world’s largest economy, peaking at around 5% in June.

After four consecutive increases of 0.75 percentage points, the Fed’s “target range” for benchmark interest rates is between 3.75% and 4%.

Elsewhere on Wednesday, oil prices were lower, with international benchmark Brent crude down 4.1% to just under $85 a barrel.

Oil’s further falls came as concerns over global demand were highlighted by a disappointing report from US purchasing managers. The S&P Global US composite PMI for November, which takes into account the services and factory sectors, hit a three-month low of 46.3, suggesting the pace at which business conditions are deteriorating is worsening.

“Trading conditions in the United States deteriorated in November . . . with production and demand falling at increased rates, in line with the economy contracting at an annualized rate of 1%,” Chris Williamson said. , chief economist at S&P Global Market Intelligence.

PMI reports for the Eurozone also pointed to a continued slowdown in business activity. “The [eurozone] the data suggests the outlook has improved slightly and some tail risks are less likely, but remain consistent with a significant recession,” Barclays said in a note to clients.

The reports come as analysts remain concerned about China, which is launching large-scale lockdowns as it battles Covid-19 outbreaks.

The European Stoxx 600 stock index closed up 0.6%. In Asia, Hong Kong’s Hang Seng Index edged up 0.6%, while China’s CSI 300 added 0.1%. Elsewhere, South Korea’s Kospi gained 0.5%.

Willem Sels, global chief investment officer at HSBC Private Banking, said he was bearish on equities generally, but has recently “dipped” into Chinese retail, hospitality and airlines expecting further support for the country’s struggling real estate sector and gradual easing. zero Covid policies in the second quarter of 2023.

If implemented, the measures would reduce the risks of a real housing crisis and boost economic growth, Sels added. “Add to that very attractive valuations and other underweight investors, and [China] is a good risk-reward.

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