Stocks fall, dollar eases broadly as investors await Fed

  • US stocks were lower in early trading
  • The dollar will ease across the board
  • All eyes on the Fed; An increase of 75 bps is expected

NEW YORK, Nov 2 (Reuters) – Global stock indexes fell and the dollar edged lower against other major currencies on Wednesday ahead of expectations of another aggressive interest rate hike by the U.S. Federal Reserve.

US Treasury yields were little changed.

The US central bank is expected to announce three-quarters of a quarter of a percentage point increase as part of an effort to curb inflation. A policy statement from the Bank’s Federal Open Market Committee (FOMC) is due at 2pm EDT (1800 GMT).

The Fed raised its benchmark overnight interest rate to 3.25% from the current range of 3.00% from zero in March.

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A key question for some market participants is whether the so-called dovish pivot is a sign that the Fed could slow down additional rate hikes.

Uncertainty over how economic data will pan out means a dovish pivot may still be some way off, analysts said.

Data on Tuesday showed US private payrolls rose more than expected in October. This followed a report on Tuesday that showed a jump in US monthly job openings, also supporting the case for the Fed to remain hawkish.

Reuters Graphics

“We’re seeing a typical calm before the FOMC storm this morning, across all asset classes really,” said Michael Brown, head of market intelligence at payments firm Caxton in London.

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Among currencies, the euro was up 0.11% at $0.9885 against the dollar, while the dollar fell 0.8% to 147.03 yen against the Japanese yen. ,

A Reuters poll found that currency strategists thought the dollar’s retreat was temporary.

The Dow Jones Industrial Average (.DJI) fell 93.27 points, or 0.29%, to 32,559.93, the S&P 500 (.SPX) lost 17.14 points, or 0.44%, to 3,838.96 and the Nasdaq lost 0.65%, to 10,819.79.

The pan-European STOXX 600 index (.STOXX) lost 0.10% and MSCI’s gauge of the world (.MIWD00000PUS) lost 0.21%.

Treasury yields were little changed in the hours before the Fed news.

While the yield on the benchmark 10-year Treasury note is above 4%, the two-year yield, which generally moves in step with interest rate expectations, is above 4.5%.

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US crude recently rose 0.44% to $88.76 per barrel and Brent was at $95.03, up 0.4% on the day.

Earlier, Chinese regulators’ upbeat remarks about policy support and rising expectations among investors about an easing of strict COVID-19 measures boosted sentiment in its market.

Bank of Japan Governor Haruhiko Kuroda on Wednesday tweaked the central bank’s yield curve control policy, citing weakness in the yen, which could be a future option.

Additional reporting by Saqib Iqbal Ahmed in New York and Dhara Ranasinghe in London; Edited by Kim Coghill, Mark Potter and Alex Richardson

Our criteria: Thomson Reuters Trust Principles.


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