The Fed is likely to debate whether to plan for a smaller rate hike in December
Wall Street rallied at the end of a volatile week that was the best one since June for all three major averages. The Dow Jones Industrial Average gained 2.47%, the S&P 500 rose 2.37% and the Nasdaq Composite added 2.31%. For the week, the S&P 500 and Dow added 4.7% and 4.9%, respectively, while the Nasdaq rose 5.2%. In part, investor sentiment was helped by some dovish signals from Fed’s Daly as she warned the central bank can easily fins itself overtightening.
Asian equities were higher on Monday following positive cues from the US as investors reacted to reports that the Fed is likely to debate whether to plan for a smaller rate hike in December. Bucking the trend, Hong Kong stocks and mainland China markets fell sharply to start the week. The Hang Seng index gave up more than 6% to its lowest levels since April 2009, while the Shanghai Composite in China was 2,04% lower even as the data showed that China’s GDP grew 3.9% in the third quarter from a year ago.
In Europe, stocks opened higher to start the week. However, the overall mood looks more tepid now as the early optimism has been waning, the upside potential looks limited for the time being. In the coming days, broader market sentiment will rely heavily on the overall message from major central banks, including the ECB. US stock index futures were little changed in early pre-market deals after last week’s gains.
The US dollar plunged ahead of the weekend due to dovish hints from Daly who downplayed the odds of another 75-bps hike in December. Also, the greenback was pressured by reports that the Japanese authorities likely intervened in markets to stem the slide of the yen on Friday. The USDJPY pair briefly peaked just below 152.00 to plunge towards the 20-DMA around 146.00. The dollar finished around 147.70, down 1.66% on the day after twelve days of gains in a row. On Monday, the pair resumed the ascent to exceed the 149.00 handle as the overall pressure surrounding the USD has eased.