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Wall Street extends gains and boosts global and European stocks

By Reuters STI (Update)


The Dow Jones Industrial Average rose 828.52 points, or 2.59%, to 32,861.8, the S&P 500 gained 93.76 points, or 2.46%, to 3,901.06 and the Nasdaq Composite added 309.78 points, or 2.87%, to 11,102.45.

Global and European stocks rose on Friday as Wall Street extended gains on hopes of a slowdown in rate hikes from some central banks.

Commodity prices were hit by a stronger US dollar. Oil prices fell after major crude importer China expanded its COVID-19 restrictions.

MSCI’s main global index, which tracks 47 countries, rose 1.5%. It was up for a second straight weekly gain as investors navigated a mix of earnings and economic data.

The Dow Jones Industrial Average rose 828.52 points, or 2.59%, to 32,861.8, the S&P 500 gained 93.76 points, or 2.46%, to 3,901.06 and the Nasdaq Composite added 309.78 points, or 2.87%, to 11,102.45.

“This stock market clearly wants to go higher and is increasingly confident that next week’s Fed fireworks will include the start of a deliberation to tighten at a slower pace,” said analyst Edward Moya. senior market manager at OANDA in New York.

Consumer spending in the United States rose more than expected in September, while underlying inflationary pressures continued to build, keeping the Federal Reserve on track to raise interest rates by 75 basis points for the fourth time this year.

“Wall Street is ignoring both another inflation report and strong consumer spending data that should justify the Fed remaining aggressive with rate hikes through the New Year,” Moya said.

The European STOXX index recouped losses of more than 1% to close at a five-week high. Earlier, Thursday’s weak forecast from Amazon sent Europe’s tech sector tumbling and the prospect of new COVID restrictions in China hit mining and oil companies.

In bond markets, borrowing costs jumped as stronger-than-expected inflation data from France, Germany and Italy put renewed emphasis on rising prices. Still, what analysts had described as a dovish ECB meeting on Thursday meant German 10-year Bund yields were set for a weekly decline.

Yields on US Treasuries rose and some investors took the recent data as an indication that the Fed will continue its more aggressive trajectory.

The US dollar was higher overall against major currencies, although it was down against the yen. Earlier, the yen weakened after Bank of Japan Governor Haruhiko Kuroda said he had “no plans to raise interest rates or head for an exit ( ultra-low interest rates) anytime soon” despite rising inflation expectations.

Sharp falls in China meant Asia-Pacific stocks closed down 1.65%.

The MSCI Emerging Markets Equity Index fell for the first time in four sessions, down 1.61%.


The BOJ’s widely expected move in Asian trade to keep policy loose came less than 24 hours after the European Central Bank raised interest rates by 75 basis points, but said “substantial” progress had already been achieved in the fight against inflation.

Investors are now turning their attention to the Fed meeting next week. Fed funds futures forecast a 98.4% chance that the Fed will raise rates by 75 basis points when policymakers meet on Nov. 1-2. Over the past week, the market has reduced expectations of a target rate from almost 5% by March 2023 to 4.85% by May 2023.

“I don’t think there will be any surprises here (in terms of rate hikes), but it will be more about the message the Fed will deliver,” said Frank Benzimra, head of Asia equity strategy at Societe Generale.

The less hawkish comments from the ECB bolstered expectations that central banks will need to ease the pace of monetary tightening, especially after the Bank of Canada announced a lower-than-expected rate hike on Wednesday.

Markets have started trading on expectations that the Fed will slow its aggressive pace of rate hikes.

“No Powell Pivot, no Santa?” Citi Emerging Economies analysts asked, referring to the so-called “Santa Claus rally” markets often see towards the end of the year.

In China, the stock market fell 2.25%, with Hong Kong’s Hang Seng index down 3.6%, rounding off a tough week. Dismal industrial earnings numbers and widening COVID-19 outbreaks all weighed on sentiment.

The euro was again below parity with the dollar, although the pound sterling appreciated against the greenback.

The stronger dollar put pressure on commodities traded in dollars, making them more expensive for holders of other currencies.

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