Stocks Rise, US Yields Slip as Markets Wait for a Fed Rate hike

NEW YORK/MILAN (Reuters) – A gauge of global stock markets rose on Tuesday as US 10-year Treasury yields slipped from the 3% level as investors remained cautious, expecting the Federal Reserve to raise interest rates by the most in one day since 2000 to curb inflation.

The data fueled inflation fears, and showed that job opportunities in the United States hit a record in March as the labor shortage persisted. This suggests that employers may need to raise wages, which will likely increase consumer prices. Read more

Investors expect the Federal Reserve to raise interest rates by half a percentage point on Wednesday, and to plan in detail to cut its $8.9 trillion balance sheet. The US central bank raised its policy rate by 25 basis points in March.

Register now to get free unlimited access to Reuters.com

Major stock indexes in Europe rose, but Wall Street pared small gains as traders braced for a potentially more aggressive decision by policy makers on Wednesday.

“The Fed will not be concerned if these next few rate increases eventually start to hurt growth and lead to some job losses, because the economy is currently on solid foundations,” said Ed Moya, chief market analyst at OANDA.

MSCI Global Index for all countries (.MIWD00000PUS) The pan-European Stoxx 600 rose 0.39% (.stoxx) Gain 0.53% on the day after the “quick crash” in Nordic markets due to a deal involving a single Citigroup sell order.

Dow Jones Industrial Average (.DJI) Closed 0.2% higher, Standard & Poor’s 500 (.SPX) Gain 0.48% and the Nasdaq Composite Index (nineteenth) Added 0.22%.

“We could get a dead jump after the Fed meeting if it wasn’t more tight-lipped than the market fears,” said Jamie Chang, chief investment officer at the Rockefeller Global Family Office, “but I think the broader trend is still very cautious on the equities side.” .

Nine of the S&P 500 sectors rose, led by a 2.87% rise in the energy sector (.SPNY)While oil and gas (.sxep) It jumped 4.1% in Europe to lead the markets there.

Overnight in Asia, the Reserve Bank of Australia raised its key interest rate by 25 basis points larger than expected, raising the Australian dollar by as much as 1.3% and hitting local stocks.

The Bank of England is expected to raise interest rates on Thursday for the fourth time in a row.

Asian shares on Tuesday mostly settled in thin holiday trade, with both Chinese and Japanese markets closed. But in Hong Kong, Alibaba (9988.HK) Shares fell 9% on concerns about the status of its billionaire founder, Jack Ma.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, May 3, 2022. REUTERS/Brendan McDermid

An official media report that Chinese authorities took action against a person named “Ma” hurt the stock badly, but it made up for the losses after reviewing the report to make it clear that he was not the founder of the company. Read more

The German benchmark 10-year bond yield rose to 1% for the first time since 2015, before easing back with caution put in place ahead of expected rate hikes in the US and UK this week.

The yield on the 10-year Treasury fell 1.5 basis points to 2.981%, after breaching the 3% major milestone for the first time since December 2018 on Monday.

The dollar fell against a basket of major currencies as investors weighed the amount of an expected move from the Federal Reserve to raise interest rates this week and beyond that was already priced in.

The dollar, buoyed by safe haven buying amid concerns about the economic outlook, remained just below a two-decade high hit in April and the euro settled above a more than five-year low hit last month.

The dollar index fell 0.106%, while the euro rose 0.17% to $1.0522. The Japanese yen was little changed at 130.16 per dollar.

Oil fell as concerns about demand eased due to the prolonged coronavirus shutdowns in China, which outweighed support from a possible European oil embargo on Russia due to the war in Ukraine.

US crude futures closed as low as $2.76 at $102.41 a barrel, while Brent fell $2.61 to settle at $104.97 a barrel.

Copper and aluminum prices fell sharply with weak manufacturing data on Monday, the COVID-19 outbreak in China and higher rates, raising fears of a decline in demand for the metal.

Gold held steady, tracking a slight decline in Treasury yields and the dollar, while investors awaited a rate hike by the Federal Reserve on Wednesday.

US gold futures rose 0.4% at $1,870.60 an ounce.

Bitcoin fell 2.56% to $37535.85.