World stocks hit five-week peak, as dollar continues retreat

Washington/London; Oct 26 (Reuters) – Global stocks rose to a five-week high on Wednesday as U.S. stocks were mixed, with investors expecting disappointing earnings from U.S. heavyweights and the Federal Reserve slowing its aggressive interest rate hike. Rate hikes.

The U.S. dollar index fell to a five-week low as it hit its highest level since Sept. 13 after Rishi Sunak became British prime minister.

The UK government’s plan to overhaul the public finances will reportedly be delayed by more than two weeks until November 17.

It’s mixed with Wall Street. The Dow Jones Industrial Average (.DJI) rose 0.51%, the S&P 500 (.SPX) lost 0.13% and the Nasdaq Composite (.IXIC) fell 0.97% at 10:37 a.m. EDT (1437 GMT).

MSCI’s broadest index of world stocks (.MIWO00000PUS) rose 0.36% to its five-week high. Europe’s Stoxx 600 (.STOXX) also hit a five-week high in trading.

Google owner Alphabet ( GOOGL.O ) closed on Tuesday with weaker-than-expected ad sales after Microsoft ( MSFT.O ) missed earnings estimates, while Dutch semiconductor supplier ASM ( ASMI.AS ) warned that concerns about slowing economic growth were renewed. .

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Some of Europe’s biggest banks have warned of the potential for an economic crisis after announcing stronger-than-expected profits, amid volatile markets and high trading momentum and high interest rates. Deutsche Bank ( DBKGn.DE ) posted a better-than-expected third-quarter profit, while Britain’s Barclays ( BARC.L ) also beat profit estimates.

Asian shares rose in a sign that some investors are taking comfort that a turning point in the global interest rate cycle is nearing.

The Fed was widely expected to hike another 75 basis points in November, but the dollar edged higher, lifting sentiment in equity markets as the Fed slowed its aggressive tightening cycle.

“I don’t want to take the optimism too far. We think it’s still too soon for the Fed to make a significant pivot, and strong markets make it more likely that the Fed will be more cautious about what it wants to do. A pivot,” said Andrew Sheets, chief equity strategist at Morgan Stanley.

Sheets also noted “the possibility of further downside” to earnings.

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The Fed’s aggressive rate hikes showed signs of cooling the labor market on Tuesday, slowing home price growth and dampening consumer confidence.

“It feels too early to declare an ‘all clear’ for equity markets – i.e. the Fed could push US real rates deeper into bounds – meaning we view this dollar decline as a correction,” Chris said. Turner, ING’s global head of markets.

Meanwhile, the Bank of Canada announced a smaller-than-expected rate hike of 50 percentage points. That kept its policy rate at 3.75%, a 14-year high, but prompted calls for another 75 basis points to rein in briefly and higher inflation.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose more than 1%, while Japan’s Nikkei (.N225) hit its highest level since Sept. 20.

The euro climbed back above $1 for the first time in five weeks.

Inflation in Australia hit a 32-year high last quarter as house building and gas costs rose. Markets are skeptical of a dramatic turnaround, but pressure has surprisingly increased on the central bank to reverse the recent turnaround.

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The Australian dollar rose more than 1%.

China’s yuan rebounded sharply to close the domestic exchange at its strongest level in two weeks, as traders and corporate clients raced to liquidate long dollar positions.

Traders said market participants were cautious after seeing big state-owned banks sell off the dollar on Tuesday to stabilize the market.

After the news, investors raised the banks’ benchmark rate by a full percentage point on Nov. 3, making the move more likely than before the announcement of the delay to around 37%.

Gold prices jumped as the dollar and bond yields fell. Spot prices rose 0.82%.

Elsewhere, oil prices are falling and there are supply concerns. US crude rose $2 a barrel.

Reporting by Dhara Ranasinghe. Additional reporting by Ankur Banerjee in Singapore. Edited by Kim Coghill and David Holmes.

Our Standards: Thomson Reuters Trust Principles.

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