GLOBAL MARKETS-Stocks rally, dollar slips as sentiment favors risk assets

(Adds near US markets)


Looking forward to the results of the mid-term elections in the United States of America


Fed policy outlook keeps rates high, dollar weak


Beijing has seen some easing of its COVID-19 restrictions


From China’s perspective, oil is falling behind commodities

By Herbert Lash and Amanda Cooper

NEW YORK/LONDON, Nov 7 (Reuters) – Equity markets rose and the dollar fell on Monday as investors weighed on the idea that China may ease COVID restrictions and hopes that the U.S. economy will slow enough to allow The Federal Reserve decided to ease its aggressive stance. of interest rates.

Markets are looking at both data showing that Chinese exports and imports unexpectedly contracted in October as China grapples with COVID-19 restrictions and that the US consumer price index on Thursday is likely to show that inflation remains elevated. .

US stocks rose as investors weighed the results of Tuesday’s midterm elections. The vote will determine whether Republicans are strong enough to win Congress and likely overshadow Democrats’ tough prospects.

“On a day-to-day basis the market is focused on the headlines and what’s immediately in front of us, and that’s the election,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

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“What may or may not happen with the election doesn’t have a big impact on the market. The big influences are the Fed, and what’s happening in Ukraine and Russia,” he said.

Major indices in Europe closed mostly higher, except for the FTSE 100 in London, while Wall Street rose in late trade after a shaky early session.

MSCI’s global index of all countries gained 1.14 percent and the broad pan-European STOXX 600 index rose 0.33 percent.

On Wall Street, the Dow Jones Industrial Average rose 1.31%, the S&P 500 gained 0.96% and the Nasdaq Composite advanced 0.85%.

While a divided Congress is generally seen as good for markets, hopes that the U.S. economy is losing enough for the Fed to slow the pace of monetary tightening pushed the dollar lower, said Joe Manimbo, market analyst at Convera in Washington.

“The market is really desperate for the Fed to turn around,” Manimbo said. “It’s going to take everything it can get in terms of signs of a soft economy to hold out hope that the pivot might happen sooner rather than later,” he said.

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Manimbo said slower inflation on the back of signs in Friday’s US jobs report for October that the labor market is cooling will be positive for risk appetite and negative, at least in the short term, for the dollar. Manimbo said.

The euro rose 0.61 percent to $1.0021 and the Japanese yen strengthened 0.01 percent to $146.60 against the dollar.

The dollar was also under pressure as traders traded on speculation that China could ease some of its COVID restrictions after the government indicated on Monday that it would make it easier for people to enter and leave the capital.

Stephane Ekolo, a strategist at Tradition in London, said the market was looking for an excuse to buy stocks.

“Although China is sticking to its zero-COVID promise, there are some people in the market who still believe that China may relax its COVID-19 policy a bit,” Ekolo said.

Last week’s impressive U.S. jobs report confirmed that the Fed will not be in a rush to ease policy, although the pace of rate hikes may slow as U.S. central banks keep rates on hold for longer, a view that pressured the Treasury. adds

Median forecasts call for US annual inflation to slow to 8.0% and for the core to fall to 6.5%.

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The yield on the two-year note, which typically tracks rate expectations, rose 7 basis points to 4.722%, while the 10-year yield rose 6 basis points to 4.218%.

A closely watched segment that measures the spread between yields on two- and 10-year notes, when the short end is higher than the long end, seen as a sign of a recession, turned sharply lower at -50.6 basis points.

Oil prices rose for more than two months on news that China, the world’s largest crude oil importer, could take steps toward reopening after years of strict COVID-19 restrictions, The Wall Street Journal reported. sources.

A barrel of American crude oil fell by 82 cents to 91.79 dollars and Brent fell by 65 cents to 97.92 dollars.

Gold prices held near a three-week high on Friday, led by a weaker dollar as investors awaited a CPI report that could affect the Fed’s interest rate policy.

US gold futures rose >0.2% to $1,680.50.

Bitcoin fell 0.55 percent to $20,791.00.

(Additional reporting by Stefano Rebaudo in Milan and Wayne Cole in Sydney; Editing by Ed Osmond, Tomasz Janowski, Chizu Nomiyama and Richard Chang)


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