Global stocks rose Wednesday while Wall Street futures declined ahead of what traders hope will be the last Federal Reserve interest rate hike for some time.
London and Frankfurt opened hire. Shanghai, Tokyo and Hong Kong advanced. Oil prices gained.
Traders expect the Fed to raise its benchmark lending rate but hope it will be the last increase in a rapid series over the past year. They worry U.S. and European rate hikes to cool inflation might tip the global economy into recession.
Wall Street’s benchmark S&P 500 index gained 1.5% after data showed U.S. wage growth slowed in late 2022. Traders took that as a sign the Fed might decide its effort to slow economic activity is taking effect.
Investors will watch how the Fed describes its decision and chair Jerome Powell’s comments for signs of whether the U.S. central bank will ease off plans for more rate hikes.
“A hawkish decision could put strong pressure on all asset classes,” said Anderson Alves of ActivTrades in a report. A more dovish outlook could “prompt expectations that the Fed could start cutting rates again in the last quarter of this year.”
In early trading, the FTSE 100 in London gained 0.3% to 7,796.13. Frankfurt’s DAX advanced 0.1% to 15,147.30 and the CAC-40 in Paris added 0.2% to 7,095.52.
On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were down 0.2%.
The S&P 500 rose 1.5% on Tuesday. The Dow added 1.1% and the Nasdaq closed 1.7% higher.
In Asia, the Shanghai Composite Index gained 0.9% to 3,284.92 after two surveys showed Chinese factory activity increased in January but still is subdued amid weak global demand and COVID-19 outbreaks that disrupted business.
The Nikkei 225 in Tokyo advanced less than 0.1% to 27,346.88.
The Hang Seng in Hong Kong added 1% to 22,072.18 after economic output shrank in the final three months of 2022 but at a slower pace than in the previous quarter. For the full year, the economy contracted by 3.5% but activity was improving after anti-virus controls were lifted.
The Kospi in Seoul rose 0.4% to 2,433.39 after data showed South Korea’s exports plunged 16.6% from a year earlier in January. December industrial production fell 2.9% from the previous month.
Sydney’s S&P-ASX 200 was 0.3% higher at 7,501.70. India’s Sensex gained 0.6% to 59,909.00. New Zealand and Southeast Asian markets rose.
Traders expect a Fed rate hike of 0.25 percentage points, its smallest increase since March after three jumps of 0.75 points and then one of 0.5 points.
Investors are hoping the Fed declares victory and starts rolling back rate increases late this year despite repeated warnings by central bank officials that the cost of borrowing could be kept highfor an extended period.
Other data announced Tuesday showed consumer confidence and a separate measure of business activity in the Midwest both were weaker than expected.
The latest round of corporate profit reports have been mixed.
McDonald’s fell 1.3% despite reporting stronger profit and revenue than expected, suggesting investors might be uneasy about upcoming profit margins as the economy cools.
Caterpillar dropped 3.5% after it reported weaker profit than expected but stronger revenue.
General Motors 8.3% after reporting stronger profit and revenue than expected.
In energy markets, benchmark U.S. crude rose 69 cents to $79.56 per barrel in electronic trading on the New York mercantile Exchange. The contract gained 97 cents on Tuesday to $78.87. Brent crude, the price basis for international oil trading, advanced 55 cents to $86.01 per barrel in London. It fell 41 cents the previous session to $84.49.
The dollar declined to 130.05 yen from Tuesday’s 130.21 yen. The euro edged up to $1.0889 from $1.0865.
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