Global Markets: Wall Street shares muted, Treasury yield higher with Powell in focus

China Reinsurance (Group)

30/11/2022 16:52

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      Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
    

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      Graphic: World FX rates http://tmsnrt.rs/2egbfVh
    

  
 (Updates prices, adds commentary, New York dateline)
    By Sinéad Carew and Dhara Ranasinghe
       LONDON, Nov 30 (Reuters) - 
    After rallies in overseas markets led by hopes for a China
reopening, Wall Street equities were going in the opposite
direction on Wednesday as investors were cautious ahead of an 
appearance by U.S. Federal Reserve chief Jerome Powell.  
  
    MSCI's broadest index of Asia-Pacific shares outside Japan
 .MIAPJ0000PUS  closed 1.63% higher as traders cheered an easing
of COVID-19 restrictions in China's Guangzhou city. European
shares also gained ground after falling for two sessions. 
    U.S. Treasury yields rose after data showed the world's
largest economy grew more than expected in the third quarter,
reinforcing expectations that the Fed keep raising interest
rates well into next year, though at a slightly slower pace.
        This appeared to add to the wary mood among U.S. equity
investors ahead of Powell's speech at the Brookings Institution
in Washington later. Investors will monitor it for clues about
the Fed's rate path in what is expected to be Powell's last
public comments on policy ahead the Fed's Dec 13-14 meeting.
  
    "Investors are sitting on their hands waiting to see what's
going to be said by Powell," said Burns McKinney, portfolio
manager at NFJ Investment Group in Dallas who expects that if
Powell's comments include anything unexpected, "it'll be a
hawkish surprise."   
        "The risk is probably more to the downside. I don't
think he's going to put himself in the position of saying
something that could be perceived as dovish," McKinney said.
  
    The Dow Jones Industrial Average  .DJI  fell 172.71 points,
or 0.51%, to 33,679.82, the S&P 500  .SPX  lost 7.26 points, or
0.18%, to 3,950.37 and the Nasdaq Composite  .IXIC  added 22.93
points, or 0.21%, to 11,006.71.
        The pan-European STOXX 600 index  .STOXX  rose 0.73% and
MSCI's gauge of stocks across the globe  .MIWD00000PUS  gained
0.10%.
  
        In currencies, trading in the dollar was choppy. The
greenback was last higher against a basket of currencies. 
  
        But 
    earlier it lost ground
     after the ADP National Employment report showed that U.S.
private payrolls increased far less than expected in November,
suggesting demand for labor was cooling amid high interest
rates.
  
        "You have the data potentially reaching a turning point,
which is celebrated by the market because it reinforces that
expectation that the Fed is not only downshifting, but maybe
yields are nearing a limited runway in terms of how much more
tightening there is to go," said Mazen Issa, senior FX
strategist at TD Securities in New York.
  
        The dollar index  =USD  rose 0.187%, with the euro
 EUR=  down 0.24% to $1.0302.
  
        The Japanese yen weakened 0.53% versus the greenback at
139.44 per dollar, while sterling  GBP=  was last trading at
$1.1916, down 0.31% on the day.    
  
        In U.S. Treasuries, benchmark 10-year notes  US10YT=RR 
were up 3.1 basis points to 3.779%, from 3.748% late on Tuesday.
The 30-year bond  US30YT=RR  was last up 1.1 basis points to
yield 3.8135%, from 3.802%. The 2-year note  US2YT=RR  was last
was up 6.2 basis points to yield 4.5351%, from 4.473%.
  
        Investors looked past disappointing business activity
data from China and an escalation of protests in some parts of
the country over stringent COVID-19 lockdowns, pinning their
hopes instead on a quicker reopening of the world's No.2
economy.
         Hong Kong's Hang Seng Index rallied more than 2%
 .HSI , although Japan's blue-chip Nikkei fell 0.2%  .N225 .
  
    Oil prices rose on signs of tighter supply, a weaker dollar
and optimism for a second consecutive day about a potential
recovery of demand in China.
        U.S. crude  CLc1  recently rose 2.52% to $80.17 per
barrel and Brent  LCOc1  was at $85.44, up 2.9% on the day.
  
    Spot gold  XAU=  added 0.2% to $1,752.40 an ounce. U.S. gold
futures  GCc1  gained 0.15% to $1,751.00 an ounce.
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Global FX performance    http://tmsnrt.rs/2egbfVh
Global asset performance     http://tmsnrt.rs/2yaDPgn
Global markets' November rally    https://tmsnrt.rs/3FeJCGM
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 (Reporting by Sinéad Carew in New York, Dhara Ranasinghe, Marc
Jones and Amanda Cooper in London; additional reporting by Kane
Wu in Hong Kong, diting by Jane Merriman and Chizu Nomiyama)
 ((Sinead.carew@thomsonreuters.com;))
 
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