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Stocks Rise on Signs of Fed Slowdown

After the release of the Federal Reserve minutes, which showed that most officials expect to slow the pace of interest-rate increases, global stocks edged up.U.S. markets were closed on Thursday for the Thanksgiving holiday. In the previous session, markets had rallied following the release of the Fed minutes.

November 24, 2022
4 minutes
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After the release of the Federal Reserve minutes, which showed that most officials expect to slow the pace of interest-rate increases, global stocks edged up.
U.S. markets were closed on Thursday for the Thanksgiving holiday. In the previous session, markets had rallied following the release of the Fed minutes.

Asian stock indexes rose on Thursday, following the lead of the U.S. markets. Japan’s Nikkei 225 climbed 1% and Hong Kong’s Hang Seng added 0.8%. In Europe, the Stoxx Europe 600 rose 0.6%.

Recent economic data has been weaker than expected, with U.S. purchasing managers’ surveys and jobless claims coming in below expectations. This has led investors to believe that the U.S. central bank may not have to tighten financial conditions much more, as the Fed’s release on Wednesday seemed to suggest that future monetary policy may be less aggressive.

"Markets are banking on the idea that central banks will have to respond to this growth slowdown," said Karim Chedid, an investment strategist at BlackRock. "This has boosted sentiment."

The WSJ Dollar Index fell to its lowest level in over six months on Thursday, as expectations for interest rates shifted. The Index, which measures the dollar’s performance against a basket of other currencies, declined by about 0.3% to 98.75. This follows a significant run-up in the value of the dollar earlier this year.

Investors are also keeping a close eye on the Chinese government's response to the rising number of Covid-19 cases in the country. This is the worst outbreak of the virus that China has faced, and many are wondering how the government will handle it.

The response from authorities is putting a damper on hopes for an economic rebound and causing worry about disruptions to the world's supply chains. However, Mr. Chedid at BlackRock said the action was relatively moderate, limiting its probable impact.

"Even this morning, we're not seeing citywide lockdowns," he said. "Authorities are still following a targeted approach."

Oil prices fell in commodity markets, with Brent crude, the global pricing benchmark, declining 0.9% to $84.42 a barrel.

Group of Seven leaders are continuing discussions on a price cap for Russian oil, which if successful could lead to more supply to global markets. According to Callum Bruce, an analyst at Goldman Sachs, a higher cap is being considered which could avoid retaliation from Russia.

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Adan Harris
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