World stock markets were quoted in two year maximums and the dollar s rose on Tuesday ahead of the Federal Reserve meeting, while Asian stock markets were hit by the judicial liquidation of Chinese real estate giant Evergrande.
The Treasury bond U.S. banks benefited from a wave of buying, pushing yields lower, which in turn kept the dollar in a tight range, after the Treasury Department said it will need to borrow less than it thought. The MSCI world equity index is trading at its highest level since January 2022.
However, markets are nervous about the escalation of tension in the Middle East, which kept the crude oil slightly highera, as investors ponder how the court order could affect Evergrande Group to the fragile Chinese real estate market.
Chinese stocks are on track to close the month down 4%, after hitting a four-year low, and Chinese government bond yields are at two-decade lows as investors cling to the prospect of government stimulus to bolster the world’s second-largest economy.
Global markets: the risk that investors see
Other risky developments for investors this week include the Fed and Bank of England’s interest rate decisions, monthly U.S. employment data and multiple corporate results, especially from stock market stars Apple, Microsoft and the Google’s parent company, Alphabet. Wall Street futures fell 0.1%.
“Lhe markets have a feeling of paralysis. They want to see what the Fed is going to say this week … and how much further the door is going to open to rate cuts,” said Marc Ostwald of ADM Investor Services. “The key right now – and here is where the markets are also struggling – is that we are facing a rate cut cyclebut central banks and markets see it in terms of a normal economic cycle.”
The S&P 500 index recorded another all-time high at the close and that optimism was transferred to the European equity markets, where the benchmark STOXX 600 gained 0.4%, after trading at two-year highs.
He dollar It improved 0.1% against a basket of six major currencies and the euro fell 0.1%, to 1.0818 dollars. However, the gains were tempered by the rise in bond prices, which lowered the yield on 10-year paper by 4 basis points, to 4.055%.
He yuan, which registers its worst monthly change against the dollar since August, was trading stable at 7.1879 units.
Investors expect more measures from Beijing to defend equity markets after last week’s cut in bank reserves.
Source: Ambito
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