London (AFP) – Equity markets mostly rose Tuesday as bond yields fell despite attempts by US Federal Reserve officials to dampen expectations for several interest rate cuts next year.
In foreign exchange, the yen slid against the dollar after the Bank of Japan decided against a shift away from its policy of not raising rates.
Asian and European stock markets mostly rose after Wall Street extended gains Monday, despite Federal Reserve officials tempering market predictions that the US central bank will next year slash borrowing costs by up to 1.5 percentage points as inflation cools.
“It is essential to recognise that the Fed will likely demand sustained improvement in inflation metrics over several months before implementing any rate cuts,” noted Stephen Innes at SPI Asset Management.
“This consideration supports the notion that the actual pivot in rates might not occur as rapidly as currently anticipated by the market.”
Nevertheless, US government bond yields and those of most other leading industrial nations slid.
Wall Street’s top indices opened higher on Tuesday, with the Dow adding less than 0.1 percent.
“The bid this morning isn’t a robust one, but once again, the key consideration after the run the stock market has had is that the move to sell is even less pronounced,” said Patrick O’Hare at Briefing.com.
Factors supporting the rise include a drop in the 10-year Treasury note’s yield, stronger-than-expected housing data for November, modest gains in shares of major companies “and plain old momentum,” he added.
US and European stock markets have charged higher in recent weeks to set record highs on speculation that central banks will begin next year to cut interest rates that they had hiked to stifle inflation
.
– Bank of Japan – The Tokyo stock market closed up more than one percent and the yen sank against the dollar after the Bank of Japan (BoJ) opted to stand pat on monetary policy, as expected, and provided no guidance on its plans for the new year.
Speculation had been swirling in recent days that the BoJ was close to shifting away from its long-running, ultra-loose monetary policy as inflation picks up in Japan.
Elsewhere on Tuesday, oil prices added to Monday’s rally on companies suspending transit via the Red Sea following attacks on cargo ships by Yemen’s Iran-backed Huthi rebels in acts of solidarity with Gaza.
The rebels have escalated attacks on tankers and other vessels, imperilling a transit route that, according to the International Chamber of Shipping, carries up to 12 percent of global trade.
In corporate news, Nippon Steel lost almost three percent in Tokyo after saying Monday it would buy US Steel for $14.1 billion, creating the world’s second-largest steel company
.
– Key figures around 1430 GMT – New York – Dow: UP less than 0.1 percent at 37,334.19 points London – FTSE 100: UP less than 0.1 percent at 7,618.00 Paris – CAC 40: DOWN less than 0.1 percent at 7,562.32 Frankfurt – DAX: UP 0.4 percent at 16,719.47 EURO STOXX 50: UP 0.2 percent at 4,530.11 Tokyo – Nikkei 225: UP 1.4 percent at 33,219.39 (close) Hong Kong – Hang Seng Index: DOWN 0.8 percent at 16,505.00 (close) Shanghai – Composite: UP 0.1 percent at 2,932.39 (close) Dollar/yen: UP at 144.37 yen from 142.73 yen on Monday Euro/dollar: UP at $1.0967 from $1.0919 Pound/dollar: UP at $1.2736 from $1.2650 Euro/pound: DOWN at 86.11 pence from 86.31 pence West Texas Intermediate: UP 0.6 percent at $72.91 per barrel Brent North Sea crude: UP 0.6 percent at $78.42 per barrel burs-rl/lth
