Stock markets diverge before US economy updates / Photo: © AFP
Stock markets diverge before US economy updates
Wall Street stocks rebounded Tuesday but Asian and European markets were mostly dragged lower as traders booked profits before updates on the US economy this week, notably a key inflation reading.
World stock markets, including in New York, have made solid gains in recent weeks on hopes that the Federal Reserve had finished with hiking rates and could cut borrowing costs next year as inflation cools.
While Wall Street's main indices spent some time in the red, they moved higher in morning trading as the yields on US government bonds fell.
An indication of lower inflation expectations and borrowing costs, a drop in bond yields is generally supportive of equities.
Meanwhile data showed US consumer confidence rose in November after three consecutive monthly declines.
The gain was due to an improvement in future expectations among consumers, but the reading still remained in an area that usually signals the onset of a recession.
A string of recent US indicators pointing to a slowing economy -- as well as a below-forecast rise in consumer prices -- have fuelled optimism that the Fed will stop hiking.
On Monday, data for US new home sales missed expectations, pointing to higher interest rates having an impact on buyers.
Investors will Thursday pore over the closely watched personal consumption expenditures (PCE) price index, the Fed's preferred guide on inflation.
They will be keeping an eye also on several other US pointers this week, including gross domestic product.
Additionally, a number of Fed officials were lined up to talk, including boss Jerome Powell, though they are expected to stick to their long-running line that policy decisions will be based on data, and that they see rates staying higher for longer to tame inflation completely.
"The market appears to have embraced the idea that slowing economic data will hasten the arrival of market-friendly rate cuts, even though the Fed has continued to telegraph otherwise," said Chris Larkin at E*Trade from Morgan Stanley.
"This week will provide plenty of opportunities for traders to decide whether that cooling trend is intact."
Expectations that rates will come down have weighed on the dollar in recent weeks, and the greenback continued to slide on Tuesday.
Elsewhere, oil prices rebounded more than two percent as OPEC and its key allies gear up for a delayed meeting due Thursday.
CMC Markets analyst Michael Hewson said the gain came "as expectations build on the prospect of another output cut in the face of weakening demand and lower prices."
Last week's gathering was postponed after some African countries reportedly baulked at more production cuts proposed by Saudi Arabia.
The Saudis and Russia are thought to be considering announcing a further reduction in output into the new year as they try to prop up prices, which have come down over recent months owing to slowing economies and softening demand.
- Key figures around 1630 GMT -
New York - Dow: UP 0.4 percent at 35,479.72 points
London - FTSE 100: DOWN less than 0.1 percent at 7,455.24 (close)
Paris - CAC 40: DOWN 0.2 percent at 7,250.13 (close)
Frankfurt - DAX: UP 0.2 percent at 15,992.67 (close)
EURO STOXX 50: DOWN 0.2 percent at 4,348.02 (close)
Tokyo - Nikkei 225: DOWN 0.1 percent at 33,408.39 (close)
Hong Kong - Hang Seng Index: DOWN 1.0 percent at 17,354.14 (close)
Shanghai - Composite: UP 0.2 percent at 3,038.55 (close)
Euro/dollar: UP at $1.0986 from $1.0958 on Monday
Pound/dollar: UP at $1.2688 from $1.2627
Euro/pound: DOWN at 86.61 pence from 86.75 pence
Dollar/yen: DOWN at 147.58 from 148.64 yen
West Texas Intermediate: UP 2.5 percent at $76.71 per barrel
Brent North Sea crude: UP 2.4 percent at $81.88 per barrel
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