Stocks shake ahead of Fed minutes as oil slips into price cap plan

  • November Fed Minutes at 1900 GMT
  • US Thanksgiving Holiday on Thursday
  • Stocks post small gains globally
  • Eurozone economic data points to a recession
  • China hit by rising COVID-19 infections

LONDON, Nov 23 (Reuters) – Global stocks were choppy on Wednesday ahead of minutes from a Federal Reserve meeting that could shed light on whether the U.S. central bank was considering easing interest rate hikes.

Crude oil prices plunged as the Group of Seven (G7) nations observed a price cap of $65 to $70 a barrel on Russian oil, above where crude grade is currently trading.

Wall Street was preparing for a quiet start, with little major corporate news to spur trading ahead of the US public holiday of Thanksgiving on Thursday, when markets are closed.

The Fed has raised interest rates sharply this year in an attempt to curb rising inflation, and New Zealand’s central bank on Wednesday raised interest rates by a record 75 basis points to 4.25%, a harbinger of more likely hikes from the Federal Reserve, European Central Bank and Bank of England next month.

“There’s an expectation that the Fed is probably closer to the end of the rate hike cycle than the start, certainly to the extent of rate hikes, most of it is already behind them,” said Mike Hewson, chief analyst. of CMC Markets.

The MSCI All Country Stock Index (.MIWD00000PUS) was up 0.16%, though it was still down 18% on the year.

In Europe, the STOXX (.STOXX) index of 600 companies rose 0.3%, leaving it close to 10% by 2022.

David Bizer, managing partner at investment manager Global Customized Wealth, said investors were being guided by what they think the Fed would do next as signs of a slowdown in the US economy became more pronounced. clear.

“The appreciation in the broader markets in the fourth quarter is driven by this belief that the Fed is waking up to the fact that the pace and magnitude of its rate hikes could have a short-term conclusion. It gives confidence to markets that this is going to be the end of it,” Bizer said.

The slowdown in euro zone business activity eased slightly in November, but overall demand continued to decline as consumers cut spending amid a cost-of-living crisis, data showed, adding to the evidence that the currency bloc is entering a recession.

“The result allays fears of a severe downturn and is consistent with a mild technical downturn earlier in the year,” ING bank said in a note to clients.

In China, authorities imposed restrictions to curb a rapid rise in COVID-19 infections, compounding investor concerns about the world’s second-largest economy.

Reuters charts

COVID RESTRICTIONS

The broader MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.5%, boosted by gains in US stocks overnight. The index is up 12% so far this month.

Hong Kong’s Hang Seng Index (.HSI) rose 0.6%, while China’s CSI300 Index (.CSI300) gained 0.1%.

“The biggest story for investors in Asia continues to be the reopening of China,” said Suresh Tantia, a senior investment strategist at Credit Suisse in Singapore.

“We had seen China markets up as much as 20%, but those expectations are being lowered, we think reopening will be a slower process and not rushed.”

China on Wednesday reported 29,157 new COVID infections for November 22, up from 28,127 new cases the day before. The number of cases in Beijing and Shanghai is rising steadily and remains high in several major manufacturing and export hubs, prompting authorities to close some facilities.

The benchmark 10-year Treasury yield traded at 3.7799% compared to Tuesday’s US close of 3.758%.

The two-year yield, rising with traders’ expectations of higher Fed funds rates, touched 4.5434% compared to a US close of 4.517%.

Before the Fed minutes, the dollar index, which tracks the US currency against a basket of other major trading partners, was slightly weaker.

The single euro currency rose 0.17% to $1.032.

“The US dollar lost some of its recent gains (as) the central bankers’ consensus on how much more interest rates should rise is wearing thin,” Commonwealth Bank analyst Tobin Gorey wrote on Wednesday.

Oil prices inched higher as data showed a bigger-than-expected drop in US crude last week, outweighing concerns about lower fuel demand from China.

US crude reversed earlier gains to fall 2.5% to $78.92 a barrel, while Brent crude lost 2.4% to $85.99 a barrel.

Spot gold traded at $1,736 an ounce, down 0.2% on the day.

While the FTX exchange crash continues to affect cryptocurrency markets, Bitcoin was up 2% at $16,483.

Reporting by Scott Murdoch in Sydney and Huw Jones in London; Edited by Kenneth Maxwell, Kim Coghill, Miral Fahmy, and Tomasz Janowski

Our standards: Thomson Reuters Trust Principles.

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