Stocks rise, US yields fall as markets await Fed rate hike – Markets

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NEW YORK/MILAN: A gauge of global stock markets edged higher on Tuesday as 10-year US Treasury yields fell 3% amid investor caution ahead of the biggest one-day rate hike expected by the US Federal Reserve since 2000.

In a sign of the Fed’s challenge to rein in rising consumer prices, data showed U.S. job openings hit a record high in March as worker shortages persisted, suggesting employers could raise wages in a move that would likely fuel inflation.

The Fed is expected to raise rates by half a percentage point at the end of a policy meeting on Wednesday and soon begin trimming assets. The US central bank raised its key rate by 25 basis points in March.

The main stock indexes in Europe rose, as did the three major indexes on Wall Street. The MSCI gauge of stocks across the world gained 0.23% and the pan-European STOXX 600 index rose 0.09% after surviving a ‘flash crash’ on Monday in the Nordic markets caused by a sell order of Citigroup.

“We could get a dead cat bounce after the Fed meeting if it’s not more hawkish than the market feared,” said Jimmy Chang, chief investment officer at Rockefeller Global Family Office, adding that anxiety investors was high.

“Potentially there could be a short-term bounce, but I think the overall trend is still very cautious on the equity side.”

Overnight in Asia, Australia’s central bank raised its key rate 25 basis points more than expected, pushing the Australian dollar up to 1.3% and hitting local equities.

On Thursday, the Bank of England is expected to raise rates for the fourth consecutive time.

In Asia, stocks were mostly flat in thinned holiday trading as markets in China and Japan were closed. But in Hong Kong, shares of Alibaba fell 9% on concerns over the status of its billionaire founder Jack Ma.

A state media report that Chinese authorities had taken action against a person surnamed Ma hit the headline hard, but he recouped the losses after the report was edited to clarify he was not the company founder.

Hong Kong’s Hang Seng Index rose 0.1% and South Korea’s KOSPI fell 0.3%. Australia’s S&P/ASX 200 index fell 0.4% as the central bank raised rates and announced further hikes to contain inflation.

The yield on 10-year Treasury bills fell 7.4 basis points to 2.922%.

The yield on the benchmark note fell 3% after hitting the key psychological milestone for the first time since December 2018 on Monday.

European stocks fall as bleak data from China dampens risk appetite

The dollar fell against a basket of major currencies as investors weighed how much of the Fed’s expected decision to raise rates this week and beyond was already priced in.

The dollar, which has been supported by safe-haven buying amid concerns over the economic outlook, remained just below the nearly two-decade high hit in April and the euro stabilized above from the lowest level in more than five years than last month.

The dollar index fell 0.222%, while the euro rose 0.31% to $1.0537. The Japanese yen strengthened 0.20% to 129.89 per dollar.

Elsewhere in the currency markets, the Australian dollar jumped after the central bank raised its benchmark rate by 25 basis points to 0.35%, the first hike in more than a decade. He also signaled more rate hikes to come as he lifts the curtain on a massive pandemic-related stimulus.

The Aussie rose 0.9% to $0.712, with the majority of analysts in a Reuters poll expecting a rise of just 0.25%.

Oil fell as worries about demand due to prolonged COVID lockdowns in China outweighed support for a possible European oil embargo on Russia over the war in Ukraine.

U.S. crude fell 0.77% to $104.36 a barrel and Brent to $106.86, down 0.67% on the day.

London copper prices fell to their lowest level in three months as COVID-19 restrictions in top consumer China and the prospect of aggressive rate hikes in the United States stoked concerns about a weaker global growth that would hit demand for metals.

Benchmark copper on the London Metal Exchange fell 2.5% to $9,525.50 a tonne.

Gold strengthened, following a slight decline in US Treasury and dollar yields, as investors eyed an aggressive rate hike from the Fed on Wednesday.

Spot gold added 0.6% to $1,874.38 an ounce.

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