Global equities rally to reach new record, dollar rises ahead of big Fed meeting

MSCI's all-country world index, which tracks equity performance in 50 nations, gained 0.14 per cent to close at a record 749.53. — Reuters pic
MSCI's all-country world index, which tracks equity performance in 50 nations, gained 0.14 per cent to close at a record 749.53. — Reuters pic

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NEW YORK, Nov 3 ― World shares reached new records yesterday, lifted by rising US and European stocks, while the latest batch of earnings reports bolstered the dollar as investors await the Federal Reserve's plans to taper its massive stimulus.

All three major US stock indexes hit intraday record highs during the session.

The STOXX 600 in Europe also posted a record close on strong corporate results as France's CAC 40 index hit its highest level since 2000.

The Australian dollar fell after the Reserve Bank of Australia (RBA) sounded a more dovish tone than expected in the first of three much-anticipated central bank meetings this week.

The Fed will release a statement at the end of its two-day meeting today, when it is expected to announce the start of tapering its bond-buying programme. Markets also are pricing an interest rate hike at the Bank of England meeting tomorrow.

“Most times, markets are happiest when they get predictability, when they get what they expect, and I think the expectation is that they are going to taper,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

MSCI's all-country world index, which tracks equity performance in 50 nations, gained 0.14 per cent to close at a record 749.53. The pan-European STOXX 600 rose 0.14 per cent.

On Wall Street, the Dow Jones Industrial Average rose 0.39 per cent, and the S&P 500 gained 0.37 per cent. The Nasdaq Composite advanced 0.34 per cent.

Asian equities and bonds were mixed as Chinese property developers worried about contagion from China Evergrande Group's debt crisis. A debt exchange from one of the country's top homebuilders triggered a flurry of credit warnings.

The Reserve Bank of Australia (RBA) yesterday sounded a more dovish tone than investors had anticipated, in the first of several central bank meetings this week, sending the Aussie to its biggest one-day loss since September 29.

Short-dated Australian government bond yields fell and the Australian dollar slid 1.0 per cent to US$0.7448 (RM3.06).

The US dollar index, which tracks the greenback against a basket of six currencies, rose 0.181 per cent even as the market has fully priced in a Fed taper announcement.

The euro fell 0.22 per cent to US$1.1581, while the yen strengthened 0.01 per cent.

US Treasury yields drifted as the market awaited the Fed's announcement.

The market does not believe economic growth is going to be very strong next year, said Joe LaVorgna, chief economist for the Americas at Natixis in New York.

“The real interest rate has stayed depressed if not slipped and that's really a function of where growth is. The market just doesn't believe growth is going to be very robust,” LaVorgna said.

The 10-year US Treasury note was down 2.4 basis points at 1.549 per cent.

The chair of the US Securities and Exchange Commission (SEC) said yesterday it will consider new oversight rules for some platforms for trading US Treasuries, in a move aimed at boosting transparency and competition.

Meanwhile, European government bond yields fell, pausing from a selloff sparked by the European Central Bank last week disappointing expectations of a firm pushback against aggressive market pricing for rate hikes.

German 10-year yields slipped 0.8 basis point to -0.168 per cent.

Oil traded below US$85 a barrel yesterday, but remained close to a three-year high in choppy trade ahead of weekly US supply reports expected to show a rise in crude inventories as traders also looked toward tomorrow's Opec+ meeting.

Brent was at US$84.52, down 0.22 per cent on the day while US crude recently fell 0.63 per cent to US$83.52 per barrel.

Bitcoin rose 4.3 per cent to US$63,544.84. ― Reuters

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