Global stock markets gain ahead of Fed update

By JOE McDONALD
AP Business Writer

BEIJING (AP) — Global stock markets and Wall Street futures rose Wednesday ahead of the release of notes from a Federal Reserve meeting that investors hope might show the U.S. central bank is moderating plans for more interest rate hikes to cool inflation.

London and Frankfurt opened higher. Shanghai, Hong Kong and Seoul rose. Oil prices declined.

Wall Street fell Tuesday in the year’s first trading day after recording its biggest annual decline in 14 years in 2022.

Traders worry the Fed and other central banks might be willing to push the world into recession to extinguish inflation that is at multi-decade highs. They hope minutes of the Fed’s December meeting might show policymakers are reducing or delaying planned rate hikes due to signs economic activity is slowing.

“While the Fed expects to keep rates higher for longer, markets continue to push back, betting on easier policy,” said Rubeela Farooqi and John Silvia of High-Frequency Economics in a report. However, they said, “we do not think a pivot to rate cuts is likely this year.”

In early trading, the FTSE 100 in London gained 0.1% to 7,563.34. The DAX in Frankfurt rose 0.8% to 14,181.67 and the CAC 40 in Paris advanced 0.4% to 6,623.89.

On Wall Street, the future for the benchmark S&P 500 index was up 0.2%. That for the Dow Jones Industrial Average was 0.1% higher.

On Tuesday, the S&P 500 lost 0.4% and the Dow slipped less than 0.1%. The Nasdaq composite dropped 0.8%.

Technology stocks were among the biggest weights on the market. Apple fell 3.7%, leaving its market value below $2 trillion for the first time since March 8, 2021. Shares in the iPhone maker fell nearly 27% in 2022, their first annual decline in four years.

In Asia, the Shanghai Composite Index gained less than 0.1% to 3,118.94 while the Nikkei 225 in Tokyo tumbled 1.5% to 25,716.86 on its first trading day of the year.

The Hang Seng in Hong Kong rose 2.3% to 20,615.21. The Kosp in Seoul added 1.7% to 2,255.98.

Sydney’s S&P-ASX 200 advanced 1.6% to 7,059.20. India’s Sensex gained 0.2% to 61.294.20. New Zealand advanced while Southeast Asian markets declined.

On top of inflation, investors worry about the impact of Russia’s war against Ukraine and China’s COVID-19 outbreaks.

The Fed’s key lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year to cool economic activity and upward pressure on prices.

The U.S. central bank forecasts that it will reach a range of 5% to 5.25% by the end of 2023. It isn’t calling for a rate cut before 2024.

The U.S. government is due to release December employment figures Thursday. Those are expected to show a decline in hiring. Investors hope that will encourage the Fed to lower or delay possible rate hikes.

The central bank’s next decision on interest rates is set for Feb. 1.

Investors also are looking for corporate profit reports in mid-January. Analysts polled by FactSet expect earnings for companies in the S&P 500 to slip during the fourth quarter and remain flat for the first half of 2023.

In energy markets, benchmark U.S. crude shed 41 cents to $76.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.33 to $76.93 on Tuesday. Brent crude, the price basis for international oil trading, retreated 39 cents to $81.71 per barrel in London. It lost $3.81 the previous session to $82.10.

The dollar edged down to 130.78 yen from Tuesday’s 131.03 yen. The euro advanced to $1.0572 from $1.0547.