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Stocks fall ahead of Fed minutes as oil falls on price ceiling plan

  • Fed minutes for November are due at 1900 GMT
  • America’s Thanksgiving holiday on Thursday
  • Shares made small gains globally
  • Economic data for the eurozone point towards recession
  • China hit by rising COVID-19 infections

LONDON, Nov 23 (Reuters) – Global stocks fell on Wednesday ahead of minutes from a Federal Reserve meeting that could shed light on whether the U.S. central bank considered moderating interest rate hikes.

Crude oil prices fell as Group of Seven (G7) nations eyed a price ceiling of $65 to $70 a barrel for Russian oil, above where crude grades currently trade.

Wall Street , was set for a muted start, with little in the way of major corporate news to stimulate trading ahead of Thursday’s US Thanksgiving public holiday, when markets are closed.

The Fed has raised interest rates sharply this year in an effort to curb rising inflation, and New Zealand’s central bank earlier on Wednesday raised interest rates by a record 75 basis points to 4.25%, signaling more likely hikes by the Federal Reserve, the European Central Bank and the Bank of England next month.

“There is an expectation that the Fed is probably closer to the end of the rate hike cycle than the beginning, certainly in the magnitude of the rate hikes is the bulk behind them,” said Mike Hewson, market analyst at CMC Markets.

The MSCI All Country Share Index (.MIWD00000PUS) was up 0.16%, although it is still down approx. 18% for the year.

In Europe, the STOXX (.STOXX) index of 600 companies was up 0.3%, leaving it down about 10% for 2022.

David Bizer, managing partner at investment manager Global Customized Wealth, said investors were being guided by what they think the Fed will do next, as signs of a slowdown in the US economy become clearer.

“The swing in the markets in general in the fourth quarter is driven by this belief that the Fed is waking up to the fact that the pace and magnitude of their rate hikes may have a short-term conclusion. That gives the markets confidence that this is going to happen. the end,” Bizer said.

The slowdown in euro zone business activity eased slightly in November, but overall demand continued to fall as consumers cut spending amid a cost-of-living crisis, data showed, adding to evidence that the currency bloc is heading into recession.

“The outcome dispels fears of a severe downturn and is consistent with a mild technical recession at the turn of the year,” ING bank said in a note to clients.

In China, authorities imposed restrictions to prevent a rapid rise in COVID-19 infections, heightening investor concerns about the world’s second-largest economy.

Reuters graphics


MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) rose 0.5%, driven by gains in U.S. shares overnight. The index is up 12% so far this month.

Hong Kong’s Hang Seng index (.HSI) rose 0.6%, while China’s CSI300 index (.CSI300) gained 0.1%.

“The biggest story for investors in Asia remains the reopening of China,” said Suresh Tantia, Credit Suisse’s senior investment strategist in Singapore.

“We had seen China markets rise up to 20%, but these expectations are being beaten back, we believe a reopening will be a slower process and will not be done in a hurry.”

China on Wednesday reported 29,157 new COVID infections for November 22, compared with 28,127 new cases a day earlier. Case numbers in Beijing and Shanghai are rising steadily, and remain high in several major manufacturing and export hubs, prompting authorities to close some facilities.

The yield on the benchmark 10-year Treasury bond traded at 3.7799%, compared with the US close of 3.758% on Tuesday.

The two-year yield , rising on traders’ expectations of higher Fed funds rates, hit 4.5434% compared with a US close of 4.517%.

Ahead of the Fed minutes, the dollar index, which tracks the US currency against a basket of other major trading partners, was slightly weaker.

The single currency euro rose 0.17% to $1.032.

“The US dollar lost some of its recent gains (as) central bankers’ consensus on how much more interest rates should rise is struggling,” Commonwealth Bank analyst Tobin Gorey wrote on Wednesday.

Oil prices rose as data showed a bigger-than-expected U.S. oil decline last week, offsetting concerns about lower fuel demand from China.

US crude reversed earlier gains to fall 2.5% to $78.92 a barrel, while Brent crude fell 2.4%% to $85.99 a barrel.

Spot gold traded at $1,736 an ounce, down 0.2% on the day.

As the collapse of the FTX exchange continues to rattle cryptocurrency markets, Bitcoin rose 2% to $16,483.

Reporting by Scott Murdoch in Sydney and Huw Jones in London; Editing by Kenneth Maxwell, Kim Coghill, Miral Fahmy and Tomasz Janowski

Our standards: Thomson Reuters Trust Principles.

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