2023-11-16 00:20:36
© Reuters. Traders operate on the New York Stock Exchange 10/20/2023 REUTERS/Brendan McDermid
By Koh Gui Qing and Danilo Masoni
NEW YORK/MILAN (Reuters) – Global stocks extended gains on Wednesday and contained losses as expectations of an end to the global cycle of rising interest rates buoyed investors following benign U.S. inflation readings and in Europe.
At the end of the session, the MSCI global stock index, which tracks stocks from 49 countries, rose 0.6% to its highest value since mid-September, following a positive session in Europe and a recovery in Asia, helped by a report of stimulus in China.
Stocks also rose on Wall Street. The index was up 0.2%, the index was up 0.5%, and the Composite index pared earlier gains to finish flat.
U.S. retail sales fell in October, although less than expected, giving some investors reason to celebrate the fact that the U.S. economy is ready for a so-called “soft landing” and that the Federal Reserve will likely no longer have more than raising rates.
Recent U.S. data “supports our view that consumer price inflation will continue to fall more quickly than many expect, even as real economic activity remains under the weight of higher rates,” Capital economists said. Economics in one note.
The pan-European index gained 0.4% after data showed that British inflation cooled more than forecast in October, hitting a low and reinforcing bets that the Bank of England will cut rates by mid-2024. ()
“The good times seem to be back. The market is starting to price in the possibility of rate cuts in the United States and also in Europe,” said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan.
The British consumer price index rose 4.6% in the 12 months to October, slowing from the 6.7% rise recorded in September, the Office for National Statistics said. Inflation in Italy and France also fell to an annual growth rate of 1.8% and 4.5% respectively last month, according to their statistics agencies.
On Tuesday, data showed that US consumer prices were flat in October, against expectations for a 0.1% increase. The core CPI, at 0.2%, was also below the forecast of 0.3%.
DOLLAR
The , which measures the currency against a basket of counterpart currencies, stood at 104.33, not far from the two-month low of 103.98 recorded on Tuesday. [FRX/]
Interest rate futures have swung to price in a Fed interest rate cut as early as May, with a 30% chance of it happening even sooner, in March.
After falling 19 basis points (bps) on Tuesday in its biggest one-day drop since March, yields jumped to 4.5333%. Ten-year German bond yields stood at 2.639%.
Sterling fell 0.72% to $1.24105, as cooler inflation prints helped the British currency reverse some of Tuesday’s rise against a falling dollar. [GBP/] This helped London stocks outperform, up 0.62%. () The euro fell by around 0.25%, to $1.08515.
SUPPORT FROM CHINA
Market sentiment was bolstered by strong industrial production and retail sales data in China and a Bloomberg News report that China plans to provide 1 trillion yuan ($137 billion) in low-cost financing to boost the real estate market.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 2.85%, hitting its highest since mid-September. The rose almost 4% in Hong Kong, with mainland property developers rising more than 5%.
China’s retail sales rose 7.6% in October, although this may have been helped by the Golden Week holiday at the start of the month. The real estate sector remains in a deep depression, with investment in January-October falling 9.3% year-on-year.
“It is clear that Beijing has become more proactive in recent weeks to help support the recovery,” HSBC economists said in a note to clients. “With the continued uncertainties highlighted by the real estate sector, we believe Beijing will continue to step up support through fiscal and monetary means.”
A weaker dollar and expectations of more stimulus in top metals consumer China kept copper prices in London hovering near a five-week peak set in the previous session. [MET/L] The rose to a two-and-a-half-year high in Shanghai, rising 0.8%.
Crude futures reversed course, trading down 1.8% at $80.98 per barrel.
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