European stocks rose 0.45%, US S&P futures are flat
The U.S. productivity index has inverted the most since 1981
The price of Brent oil decreased in 4 weeks
By Carolyn Cohn and Wayne Cole
LONDON/SYDNEY, Nov 18 (Reuters) – Global stocks headed for a 1% weekly loss on Friday, off a two-month high after US Federal Reserve officials sounded more cautious on interest rates, while yields American bonus. price curve for recession.
Dollar and bond yields rose after the President of St.
This was a blow to investors who were betting rates would reach 5% and saw Fed funds futures sold off as markets priced in a higher chance that rates would now rise to 5-5.25%, instead of 4.75- 5.0%.
“The Fed has gone back on its word and pushed back against the market narrative — we’re not going to see a pivot,” said Arun Sai, senior multi-year strategist at Pictet Asset Management.
Sai said the market is now “running on fumes” and will focus on the real economy’s response to rate hikes, as well as anecdotal signs of a slowdown in the US labor market.
MSCI’s index of world equities rose 0.17% while U.S. S&P futures were flat after the S&P 500 index fell 0.3% on Thursday.
European shares rose 0.54 percent, with banks up almost 1 percent as the European Central Bank prepares to begin the largest withdrawal of cash in its history from the euro zone banking system.
Banks are expected to issue 500 billion euros worth of Long-Term Refinancing Operations (TLTRO) loans. The ECB announcement is expected at 1105 GMT.
Britain’s FTSE gained 0.33%, a day after finance minister Jeremy Hunt announced tax increases and spending cuts in an attempt to reassure markets that the government is serious about fighting inflation.
British retail sales last month saw only a partial recovery after shops closed in September for Queen Elizabeth’s funeral, data showed on Friday, and they remained below their pre-pandemic levels as higher inflation weighed on spending power. hit
“Although the Bank of England is likely to continue to raise rates despite the economic slowdown, their peak will be lower than in the US,” said Dean Turner, head of the eurozone and UK economist at UBS Global Wealth Management.
US two-year yields returned to 4.48%, slightly recovering from last week’s sharp 33 basis point drop in inflation to 4.29%.
That left them with 69 basis points over the 10-year yield.
The dollar traded at 106.65 against a basket of currencies, after hitting a three-month low of 105.30 earlier in the week.
The US dollar was steady at 140.23 yen, but held off its recent low of 137.67. Sterling rose 0.3% to $1.1904.
The euro settled at $1.0357, off a four-month peak of $1.0481 on Tuesday as some policymakers argued for caution on tightening.
ECB President Christine Lagarde will give a keynote speech later on Friday that may offer guidance on which way the majority of the bank may stand. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat.
Chinese blue chips fell 0.45 percent amid reports that Beijing had asked banks to control liquidity in the bond market after high yields caused losses for some investors.
There were also concerns that a surge in COVID-19 cases in China would derail plans to ease strict restrictions on movement that have crippled the economy.
Japan’s Nikkei fell 0.1% as data showed inflation running at a 40-year high as a weak yen pushed up import costs.
Still, the Bank of Japan argues that inflation is largely driven by energy costs beyond its control and that the economy continues to need ultra-easy policies.
Brent crude fell to a four-week low on concerns about weakening demand in China and further interest rate hikes by the Fed. Brent was down 0.2% at $89.51 per barrel. The barrel of American crude oil continued at 81.67 dollars.
Gold was up 0.1 percent at $1,763 an ounce after hitting a three-month high of $1,786 earlier in the week.
(Editing by Bradley Perrett, Sam Holmes & Simon Cameron-Moore)