Stocks fall, dollar eases broadly as investors await Fed

  • U.S. stocks are lower in early trading.
  • The dollar is lighter on the board
  • All eyes on the Fed; A hike of 75 bps is expected

NEW YORK, Nov 2 (Reuters) – Global stock indexes fell and the dollar was slightly lower against other major currencies on Wednesday as the U.S. Federal Reserve expected another sharp interest rate hike later in the day.

US Treasury yields were little changed.

The U.S. central bank is expected to announce a fourth rate hike of three-quarters of a percentage point as part of its efforts to bring down inflation. The Federal Open Market Committee (FOMC) released its policy statement at 2 pm EDT (1800 GMT).

The Fed raised its overnight interest rate to 3.25% from near zero in March to 3.00%.

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A key question for some market participants is whether the Fed will signal that it may delay further rate hikes, a so-called dovish pivot.

Analysts said uncertainty over how economic data would be released meant a major pivot could still be some way off.

Data on Tuesday showed US personal wages rose more than expected in October. It followed a report on Tuesday that showed a jump in monthly US job openings and supported the Fed’s case for remaining dovish.

Reuters graphics

“The typical calm before the FOMC storm is what we’re seeing this morning across all asset classes,” said Michael Brown, head of market intelligence at London-based Caxton.

In currencies, the euro was up 0.11% against the dollar at $0.9885, while against the Japanese yen the dollar fell 0.8% to 147.03 yen. ,

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A Reuters poll of currency strategists thinks the dollar’s retreat is temporary.

The Dow Jones Industrial Average (.DJI) was down 93.27 points, or 0.29%, at 32,559.93, the S&P 500 (.SPX) was down 17.14 points, or 0.44%, at 3,838.96 and the Nasdaq Composite (.IX) was down 6 points, or 0.00%. 0.65%, to 10,819.79.

The pan-European STOXX 600 index (.STOXX) lost 0.10% and MSCI’s benchmark of shares around the world (.MIWD00000PUS) fell 0.21%.

Treasury yields were little changed in the hours before the Fed news.

Benchmark 10-year Treasury notes were above 4%, while two-year yields, which typically keep pace with interest rate expectations, were above 4.5%.

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U.S. crude recently rose 0.44 percent to $88.76 a barrel, with Brent at $95.03, up 0.4 percent on the day.

Earlier positive feedback from Chinese regulators on policy support and hopes among investors of easing strict Covid-19 measures boosted sentiment in the market.

Bank of Japan Governor Haruhiko Kuroda said on Wednesday that a change in the central bank’s yield curve control policy may be an option going forward, contributing to the yen’s weakness.

Additional reporting by Saqib Iqbal Ahmed in New York and Dara Ranasinghe in London; Editing by Kim Coghill, Mark Potter and Alex Richardson

Our Standards: The Thomson Reuters Trust Principles.

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