LONDON (Reuters) – Global stocks held onto their highest levels in two weeks on Wednesday, although another strong interest rate hike from New Zealand dampened the notion that central banks may be about to slow the pace of rapid monetary tightening.
Oil prices were little changed ahead of OPEC+ producers meeting to discuss a significant cut in crude production after rising more than 3% in the previous session.
Asian stocks rose, but European stock markets opened broadly lower and US stock futures point to a weak start for Wall Street.
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S&P 500 . Index (.SPX) Tuesday marked its biggest one-day rise in two years after weak US economic data and a lower-than-expected rate hike from Australia, sparking hope for a less severe tightening by the Federal Reserve.
Meanwhile, US 10-year Treasury yields, which move inversely with prices, fell only 12 basis points this week as hopes of a slowdown in the Fed’s rapid tightening solidified.
But a more cautious tone surfaced on Wednesday, with a sharp rise in interest rates in New Zealand, dampening hopes of a pause or a slowdown in violent hikes from other major central banks.
It’s premature to talk about a slowdown in rate hikes, said Maximilian Konkel, chief investment officer for Germany, Global Family and Institutional Wealth at UBS.
“For us, especially when we think about central bank actions, it’s too early to call on the Fed to stop soon,” he said. “We need indications of a clear downward trend in US inflation… and more indications of a slowing labor market. We are not there yet.”
European shares fell after gaining more than 5% in the previous three sessions. STOXX 600 broad index in Europe (.stoxx) It is down 1%, while the leading stock indexes in London, Paris and Frankfurt are down as much as 0.5%.
MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) Up 2.3% after US stocks ended the previous session higher.
That sent the MSCI global stock index up about 0.2%, after touching its highest level in nearly two weeks prior to the session. (.MIWD00000PUS)
Waiting for OPEC +
Investors are closely watching the crucial supply decision from OPEC+ due later Wednesday, which could have global implications for already high energy prices and inflation.
After posting strong gains the previous day, US crude settled at $86.60 a barrel, and Brent crude rose just 0.1% at $91.86 a barrel.
OPEC+, which includes Russia and Saudi Arabia, may cut between one and two million barrels per day, according to a Reuters report.
US Treasury yields rebounded and the dollar stabilized, after it suffered its biggest setback in more than two years on Tuesday. The yield on the benchmark 10-year Treasury bond rose nearly 7 basis points at 3.69%.
The dollar rose 0.2 percent to 144.40 yen, while the euro fell by 0.4 percent to $ 0.9945, after rising 1.7 percent on Tuesday in the largest percentage gain in one day since March.
“While European assets have rebounded sharply, it is difficult to point to any fundamental change in the eurozone outlook that would warrant a significant return in market appetite for the euro thus far,” said Francesco Pessol, currency strategist at ING.
Elsewhere, spot gold was trading at around $1,713 an ounce, down about 0.75%.
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(Reporting by Dara Ranasinghe and Elizabeth Hawcroft) Editing by Toby Chopra
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