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Stock Markets

Shares slip, yields rise as market awaits likely hawkish tone from Fed

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Shares slip, yields rise as market awaits likely hawkish tone from Fed
© Reuters. FILE PHOTO: Passersby walk past an electric board displaying Japan’s Nikkei share average outside a brokerage in Tokyo, Japan April 18, 2023. REUTERS/Issei Kato

By Herbert Lash and Harry Robertson

NEW YORK/LONDON (Reuters) – Global stocks eased and the benchmark Treasury yield rose close to levels last seen in 2007 as a plunge in U.S. homebuilding in August underscored the balancing act the Federal Reserve faces in signaling its outlook on interest rates this week.

Traders and investors avoided big bets ahead of rate decisions by the Fed on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday, in a week with policy decisions also expected from other central banks.

Oil prices rose for a fourth straight session, with futures for global benchmark climbing past $95 a barrel, to further exacerbate inflation concerns and question whether rates need to go higher to quash inflation.

The U.S. central bank will likely pause its aggressive hiking of interest rates and also indicate its outlook on rates and economic growth in the months ahead when Fed Chairman Jerome Powell speaks on Wednesday.

“The story is a function of how dovish versus how hawkish he is going to be,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York, referring to Powell.

“The more dovish he is leads to an environment where yields are likely to move higher,” he said. “The less willing they are to assure being restrictive, the more likely inflation is to come back and bother them.”

The impact of rising interest rates crimped demand in U.S. housing as a resurgence in mortgage rates led homebuilding last month to plunge to more than a three year-low.

The yield on benchmark rose 2 basis points at 4.339%, just below the 4.366% level reached on Aug. 22, which was the highest since late 2007.

Stocks slid as expectations interest rates will stay higher for longer put a damper on the market. Futures show the Fed will keep its overnight lending rates above the 5% mark until late July 2024.

MSCI’s gauge of stocks across the globe shed 0.46%, while the pan-regional index in Europe lost 0.18%.

On Wall Street, the fell 0.69%, the lost 0.65% and the dropped 0.84%. The , which gauges the currency against six major peers, was 0.08% at 105.00, not far from Thursday’s six-month high of 105.43.

Investors and central bankers are contending with a sharp rise in oil prices as demand has picked up while Saudi Arabia and Russia have limited supply, and weak U.S. shale output has increased concerns.

futures rose 1.55% to $92.90 a barrel, while Brent was at $95.49, up 1.12%.

Samuel Zief, head of global FX strategy at JPMorgan Private Bank, said central banks should not be overly concerned by the run-up in oil prices, which he said should fade as economies slow.

“What the central banks are really, really focused on, it’s not really the supply-side energy shocks anymore, it’s really the sticky services part of the inflation basket,” he said.

The Bank of England sets policy on Thursday and is expected to hike rates by 25 basis points to 5.5%, in what many investors believe will be the last increase of the cycle.

The Bank of Japan is expected to leave rates on hold in negative territory on Friday, although it too will be scrutinized for clues about the outlook after Governor Kazuo Ueda hinted at a move away from ultra-loose policy.

In Asia, fell 0.87% under the weight of big losses for chip-related stocks including Tokyo Electron.

Japanese markets were closed Monday, when Asian tech stocks were sold off following a Reuters report that TSMC had asked its major vendors to delay deliveries.

Stock Markets

Ethereum founder’s token transfers fuel market speculation

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Ethereum founder's token transfers fuel market speculation
© Reuters

Vitalik Buterin, the founder of , has been actively transferring Ether tokens, sparking speculation among investors and putting pressure on the leading altcoin, Ethereum. Data from Etherscan shows that Buterin’s Vb 2 wallet moved 278 Ether to the ox3F62 address over three transactions.

The transactions were divided into portions of 200, 68, and 10 Ether tokens. The reasons behind these transfers remain unclear, with some market observers suggesting that Buterin might be preparing to sell his tokens. If true, this could potentially lead to significant price drops for Ethereum.

Earlier this week, Buterin had transferred 300 Ether, equivalent to roughly $493K, to the Kraken exchange. In addition, Lookonchain reported that an investor with substantial holdings, often referred to as a ‘whale’, deposited approximately 30,000 Ether (around $50 million) into KuCoin, Binance, and OKX.

These movements by Buterin and other large Ethereum holders typically result in a decrease in ETH prices. This trend has been particularly noticeable recently and has affected Ethereum’s expected recovery. On Wednesday, following Binance’s failed attempt to dismiss an SEC lawsuit, the cryptocurrency fell below $1.6K due to a broader market decline.

As of today, Ethereum was trading at $1,595.99, representing a minor gain of 0.48% over the past day. For Ethereum’s price to stabilize and avoid further dips, it needs to surpass a resistance level of $1,666. Over the past two months, this threshold has repeatedly proven to be a significant barrier for Ethereum’s price growth.

The cryptocurrency saw a 3.8% drop over the last 72 hours, suggesting that if this downward trend continues, Ethereum could potentially dip another 4% towards the $1,460 support level. In light of these developments, Ethereum followers should monitor ‘s performance and broader financial market trends to predict Ethereum’s future price movements as Ethereum’s price is often influenced by these factors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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Stock Markets

Dollar Hits 6.5-Month High as Central Banks Adjust Rates

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Dollar Hits 6.5-Month High as Central Banks Adjust Rates
© Reuters.

The dollar reached a 6.5-month peak on Thursday, September 21, 2023, after the U.S. Federal Reserve signaled a continuation of its restrictive policy, even as it held rates steady. This comes as the Swiss franc fell following the Swiss National Bank’s decision to maintain unchanged rates, marking the first time it has not increased rates since March 2022.

On Wednesday, the Fed met market expectations by keeping interest rates within the 5.25%-5.50% range. The U.S. central bank, however, reinforced a hawkish monetary policy stance that its officials believe can mitigate inflation without damaging the economy or causing significant job losses.

The Fed’s updated projections indicate tighter rates through 2024 than previously anticipated. Niels Christensen, chief analyst at Nordea, noted that the Fed was more hawkish further out on the curve with the dot plots signaling just 50 basis points of cuts in 2024. He added that the dollar should remain well-supported until we start seeing softer data.

In Europe, Sweden’s Riksbank and Norway’s central bank both raised rates by 25 basis points, in line with market expectations. Meanwhile, the pound sank to its lowest since April ahead of the Bank of England’s policy announcement later in the day.

The yen was at its lowest since November before Friday’s Bank of Japan policy announcement. Despite this, Matt Simpson, senior market analyst at City Index, expressed doubt that any change in policy would be announced by the Bank of Japan in their Friday meeting.

Both the Australian and New Zealand dollars fell following the Fed’s meeting. However, the found some support after data released on Thursday showed that New Zealand’s economy grew more than expected in Q2 2023.

In other news, European equities stumbled after the U.S. Federal Reserve signaled it might have at least one more rate hike in store after its historically rapid run-up in rates over the last 18 months. This was compounded by the Swiss National Bank’s surprise decision to keep its rates steady and Norway’s central bank signaling a potential rate hike in December.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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Stock Markets

Dollar edges up vs pound, euro on Fed support; yen stronger

letizo News



Dollar edges up vs pound, euro on Fed support; yen stronger
© Reuters. FILE PHOTO: Japanese yen and U.S. dollar banknotes are seen with a currency exchange rate graph in this illustration picture taken June 16, 2022. REUTERS/Florence Lo/Illustration/File Photo

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The U.S. dollar edged higher against the pound and the euro on Thursday, a day after the Federal Reserve held interest rates steady but stiffened its hawkish stance with a further rate increase projected by the end of the year.

The pound and Swiss franc tumbled on Thursday after the British and Swiss central banks kept rates unchanged, while the Japanese yen strengthened against the greenback before Friday’s Bank of Japan policy announcement.

The Fed held interest rates steady at the 5.25%-5.50% range, in line with market expectations on Wednesday, but it signalled that its officials increasingly believe hawkish policy can succeed in lowering inflation without wrecking the economy or leading to large job losses.

Along with another possible rate hike this year, the Fed’s updated projections show significantly tighter rates through 2024 than previously expected.

“Dollar bulls absolutely got what they wanted yesterday,” Helen Given, an FX trader at Monex USA.

“Though Powell didn’t go as far as to say he expects a soft landing, it’s pretty clear between the dot plot and the Fed’s updated growth forecasts the central bank has convinced markets that is where the U.S. economy may be headed,” Given said.

“Of course, this contrasts fairly directly with guidance from the ECB and BoE, facing much more dire economic situations,” she said.

The euro fell 0.02% to $1.0658.

The pound fell to its lowest since March after the Bank of England held interest rates steady on Thursday, following a cooler-than-expected inflation report the previous day.

Thursday marked the first time since December 2021 that the BoE did not raise rates at its monetary policy meeting, a halt to a run of 14 consecutive rate hikes.

The pound was 0.41% lower at $1.2293.

Earlier, the Swiss franc dropped after the Swiss National Bank unexpectedly held rates steady, marking the first time the central bank has not hiked since March 2022, although it kept options open for further rate rises.

Meanwhile the yen was up 0.62% at 147.38 per dollar as attention stayed fixed on the possibility of the Japanese government intervening in foreign exchange markets to prop up the currency.

Japan will not rule out any options in addressing excess volatility in currency markets, the government’s top spokesperson said on Thursday, issuing a fresh warning against the yen’s decline towards the psychologically important 150-mark per dollar.

“Traders are repositioning before both the meeting tomorrow and CPI releases,” Monex’s Given said.

“(BOJ Governor Kazuo) Ueda did mention that if CPI continues strong the BoJ would look at raising interest rates – hence why it likely will not come tomorrow, but the following meeting is a great candidate for it,” she said.

“Any reading above expectations of 3.0% would put a hike from the BoJ squarely on the table, prompting today’s moves,” Given said.

Meanwhile, Sweden’s Riksbank and Norway’s central bank both raised rates by 25 basis points, in line with expectations.

The euro was up 0.4% against the Swedish crown and about flat against the Norwegian crown following the respective decisions.

In cryptocurrencies, bitcoin was down about 2.1% on the day at $26,563.

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