Expect similar interest rate market behavior in 2022 akin to 2014: Dennis Mitchell
Global stocks and U.S. index futures rose as signs of a solid recovery in the world’s largest economy offset jitters over inflation and a faster tapering of Federal Reserve stimulus.
Trading volumes narrowed around the world as U.S. traders stayed off for the Thanksgiving holiday. The turnover in Asia’s equity benchmark was 17 per cent lower than its 30-day average. It shrank 26 per cent in Europe and 30 per cent in Latin America.
Contracts on the S&P 500 and Nasdaq 100 indexes rose 0.1 per cent each, paring advances of as much as 0.4 per cent. MSCI’s benchmark for world stocks rose 0.1 per cent. The dollar was steady at a 16-month high. Remy Cointreau SA jumped 13 per cent in Paris on an earnings beat. Nickel and copper paced a base-metals selloff in London amid an uncertain demand outlook.
U.S. stocks proved resilient to a slew of economic data and Fed minutes on Wednesday that supported expectations for a quicker removal of stimulus by the Fed. While inflation concerns deepened, traders were in no mood to miss a play on the U.S. recovery story. Rising bets not only for a quicker taper, but also an earlier liftoff of interest rates, suggest caution may return after Thanksgiving.
“The market mood is rather OK-ish after the minutes,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “At this point, it makes sense to expect an earlier, and maybe a steeper rate normalization from the Fed.”
European traders shrugged off a worsening COVID-19 situation in the continent. The Stoxx 600 gauge rose the most since Nov. 1, boosted by utilities and real estate companies. Remy Cointreau soared to a record high after the French distiller reported first-half results that Citigroup Inc. called “truly exceptional.”
The dollar remained on course for its fifth weekly rally. Multiple technical patterns, including Fibonacci Retracement, support fundamental drivers helping the currency such as a winding down of excess liquidity in the global markets and concern over a persistent pandemic.
MSCI Inc.’s Asia-Pacific share index snapped a three-day drop. China urged local governments to boost investment to counter a growth slowdown, while the Chinese city of Chengdu sought to ease a cash crunch at property developers. It became the first major local administration to address the liquidity squeeze in the real estate industry, a key component of the economy.
South Korea followed New Zealand in raising interest rates to contain inflation. The won fell amid an uncertain time line for the next hike. The forint posted the biggest gains in emerging markets after Hungary raised the benchmark rate by more than anticipated.
Crude oil posted a small loss after OPEC said a planned coordinated release of reserves by major consuming nations may swell a crude surplus expected early next year.
Friday may also see lower equity volumes as U.S. markets are set to close three hours earlier than usual.
Some of the main moves in markets:
- Futures on the S&P 500 rose 0.1 per cent as of 3:38 p.m. New York time
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI World index rose 0.1 per cent
- The MSCI Emerging Markets Index rose 0.1 per cent
- The MSCI Asia Pacific Index rose 0.2 per cent
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1208
- The British pound was little changed at US$1.3323
- The Japanese yen was little changed at 115.36 per dollar
- The offshore yuan rose 0.1 per cent to 6.3877 per dollar
- Germany’s 10-year yield declined two basis points to -0.25 per cent
- Britain’s 10-year yield declined three basis points to 0.97 per cent
- West Texas Intermediate crude fell 0.5 per cent to US$78.03 a barrel
- Gold futures rose 0.2 per cent to US$1,790.80 an ounce