Equities, US Futures Are Stable Ahead of Fed Minutes: Markets Wrap

(Bloomberg) — European stocks and US stock futures were stable as investors awaited the release of policy minutes from the last Federal Reserve meeting for insight into the path of rate hikes.

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The Stoxx Europe 600 remained close to a three-month high, while base and energy inventories rose. Credit Suisse Group AG fell after warning of a fourth-quarter loss. Contracts on the S&P 500 rallied higher after the underlying gauge closed Tuesday at its highest level since mid-September. Nasdaq 100 futures were little changed.

Shares in Manchester United Plc jumped in premarket trading in the US after owners of the historic English football club said they were exploring options that could lead to a sale. An index of Asian stocks rose. Trading volumes in the market are expected to be lower given the US Thanksgiving holiday on Thursday.

A gauge of dollar strength is falling, with the New Zealand currency one of the strongest performers against the greenback after the country’s central bank hiked interest rates by the highest rate ever. Ten-year US Treasury yields fell by one basis point.

The release of the minutes of the Fed’s meeting on November 1 and 2 — scheduled for 2 p.m. in Washington — will be studied to see how consensus policymakers beat a higher spike for interest rates than previously indicated in their fight against inflation. Some investors expect lower-than-expected inflation numbers to prompt the Fed to moderate the size of its rate hikes as early as next month’s meeting.

“Since the meeting, the market has shifted in its anticipation of what might happen in December, and this week’s minutes could help confirm the Fed’s intent,” said economists at Rand Merchant Bank in Johannesburg. “The risk to markets as of the minutes is that they appear less aggressive than expected, which could mitigate some of the repricing of rate hike risk we saw late last week.”

European investors processed data showing that private sector activity in Germany and France, the eurozone’s two largest economies, contracted in November, painting a bleak picture for a region that may already be in recession.

Meanwhile, a measure measuring industrial and services activity in the eurozone rose unexpectedly in November, indicating that companies are seeing tentative signs that the region’s economic slump could ease as record inflation cools and expectations for future output improve.

In Asian trading, Hong Kong tech stocks faltered before consolidating their gains as investors weighed the implications of a report Ant Group Co. faces a fine of more than $1 billion from the Chinese central bank. The news sparked speculation that this could be a possible end point of the government’s crackdown on technology and that Alibaba Group Holding Ltd. could reignite efforts to market Ant shares.

Bitcoin held onto recent gains after rising as much as 4.2% Tuesday to lift the digital asset from its lowest price since November 2020.

Oil rose as traders awaited further details on a plan to contain Russian crude prices and assessed the demand outlook in Covid-hit China.

Main events this week:

  • S&P Global PMIs: US, Euro Area, UK, Wednesday

  • US MBA Mortgage Applications, Durable Goods, First Unemployment Claims, University of Michigan Sentiment, New Home Sales, Wednesday

  • Minutes from the Federal Reserve meeting on November 1 and 2, Wednesday

  • The ECB will publish the report of its policy meeting in October on Thursday

  • The US stock and bond markets are closed for Thanksgiving, Thursday

  • US stock and bond markets close early Friday

Some of the major moves in markets:

Shares

  • The Stoxx Europe 600 was up 0.2% from 9:20am London time

  • Futures on the S&P 500 changed little

  • Futures on the Nasdaq 100 were little changed

  • Futures on the Dow Jones Industrial Average had changed little

  • The MSCI Asia Pacific Index rose 0.3%

  • The MSCI Emerging Markets Index rose 0.4%

Currencies

  • The Bloomberg Dollar Spot Index had changed little

  • The euro was little changed at $1.0310

  • The Japanese yen changed little at 141.37 per dollar

  • The offshore yuan fell 0.3% to 7.1612 per dollar

  • The British pound was unchanged at $1.1886

Cryptocurrencies

  • Bitcoin rose 2.6% to $16,547.03

  • Ether rose 3.2% to $1,165.89

Bonds

  • The 10-year Treasury yield fell by one basis point to 3.75%

  • The German 10-year yield was little changed at 1.99%

  • UK 10-year yields fell by four basis points to 3.10%

Raw materials

  • Brent oil rose 0.9% to $89.17 a barrel

  • Spot gold fell 0.2% to $1,737.05 an ounce

This story was created with the help of Bloomberg Automation.

–With help from Richard Henderson.

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