Stocks advance on expectations the US Federal Reserve is likely done with interest rate hikes
US stock markets rallied overnight, buoyed by solid gains in tech giants at the start of a shortened trading week. The Dow Jones and the S&P 500 added 0.58% and 0.74%, respectively, while the Nasdaq Composite gained 1.13% to notch the fifth consecutive bullish session. In individual stocks, shares of Microsoft were up 2% to refresh a long-term high amid reports that former OpenAI chief Sam Altman will be joining the company to lead a new AI research team. Nvidia rallied 2.3% to close at a historic high in anticipation of its quarterly earnings report. US markets will be closed on Thursday due to the Thanksgiving holiday, while Friday will be a shortened trading day. As such, trading is expected to be muted for much of the week.
Following suit, Asian stocks mostly advanced on Tuesday to hit two-month highs on rising expectations the US Federal Reserve is likely done with interest rate hikes. MSCI’s broadest index of Asia-Pacific shares outside Japan was nearly 1% higher, being on course for its biggest monthly gain since January. Hong Kong’s Hang Seng Index gained 0.30% amid reports of Beijing’s latest stimulus rollout for the property sector. Japan’s Nikkei 225 edged higher initially, but failed to preserve the upside momentum and finished 0.1% lower while still staying close to the 33-year high it touched at the start of the week.
Meanwhile, European equities are headed for a flat open as bullish sentiment wanes gradually. Now, investors shift their focus to minutes of the Federal Reserve’s last meeting to gauge which way the central bank is headed with interest rates. Fed funds futures pricing data suggests a nearly 100% probability that the Fed will leave rates unchanged at its upcoming December meeting. In general, regional equities are looking more tentative for now after yesterday’s gains. US stock index futures look little changed in early pre-market deals, adding to signs that investors turn more cautious ahead of Fed minutes.
In currencies, the USD index stays on the defensive, trading around fresh late-August lows seen just below the 103.20 zone earlier in the day. The greenback could challenge the 103.00 mark if the selling pressure keeps building in the near term. In this context, all eyes will be on Fed meeting minutes as the central bank’s rhetoric will set the tone for markets during a shortened trading week. On the upside, a decisive recovery above 103.50 would pave the way towards the 104.00 figure that represents the immediate significant target for bulls.