World stocks in upbeat spirits, Fed’s Powell in the spotlight

LONDON, Nov 30 (Reuters) – Global equity markets rallied on Wednesday and the focus turned to Jerome Powell, who speaks later in the day in what will be the U.S. Federal Reserve chief’s last chance to steer sentiment ahead of the December Fed meeting. .

A Santa rally has appeared early for some markets, with Asian stocks set for their strongest month since 1998 and emerging market stocks poised for their biggest monthly surge since 2009.

But the dollar, hit by expectations that a peak in US interest rates is near, was set for its biggest monthly loss in more than 20 years.

Fed chief Powell will speak on the economy at the Brookings Institution in Washington. These are likely to be his last public comments on monetary policy before the blackout period before the Fed’s Dec. 13-14 meeting.

“I’m not sure if the markets are looking for a pivot but we think it will stress the Fed is nowhere near the end of its tightening cycle,” said James Rossiter, head of global macro strategy at TD Securities. London.

Meanwhile, investors looked to disappointing business activity data from China and an increase in protests in some parts of the country over the strict COVID-19 lockdown, putting hopes instead for a faster reopening of the world’s No.2 economy the

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European stock markets rallied (.STOXX) and US equity futures showed a firm start for Wall Street.

MSCI’s broadest gauge of Asia Pacific shares outside Japan (.MIAPJ0000PUS) rallied more than 1% to its highest since September. It was set for its best month since 1998.

Hong Kong’s Hang Seng index rallied more than 2% (.HSI), although Japan’s blue-chip Nikkei fell 0.2% (.N225).

Investors appeared to see the protests in China as a catalyst for the economy to open up again after the strict COVID-19 lockdown. Chinese authorities on Tuesday said the country would speed up vaccinations against COVID-19 for the elderly.

“Despite the sharp increase in cases and recent protests, China remains steadfast in its approach to COVID and continues to adjust its policies, which is encouraging for investors,” said Redmond Wong, Greater China market strategist at Saxo Markets in Hong Kong. .

Hopes for a reopening of China and an expectation that inflation and central bank interest rates may be close to peaking mean that November looks set to end up being a big month for many markets.

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China’s property stocks are up 70% this month, poised for better months. They have fallen more than 80% since the beginning of 2020.

And a rally in emerging markets was in full swing, with the MSCI emerging stock index up around 14% in November and was set for its best month since May 2009 (.MSCIEF) and (.HSMPI).

Preliminary November inflation data for the euro zone at 1000 GMT could also boost investor sentiment.

FED TALK

Signs that US inflation is rising, meaning the Fed may slow the pace of its aggressive rate hikes, boosted the government bond market but dampened the strong dollar.

The yield on the 10-year US Treasury fell 2.5 basis points to around 3.73% and fell by 30 bps this month – set for its biggest monthly drop since March 2020.

“Although the surprise slowdown in inflation is good news, it is only the first in a long series of conditions the Fed needs to see before it pauses its hiking cycle,” said ING senior rate strategist Antoine Bouvet.

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“Longer term, the direction of travel is indeed towards lower inflation and an end to this tightening cycle but we expect the Fed to take the Fed Funds rate some 100 bps higher than now, just below 5%, before this is the case.”

The US dollar index, which measures the greenback’s performance against six major currencies, fell 0.4% to 106.40.

It lost about 4.3% in November, making this the biggest one-month drop since June 2010.

The euro was up 0.4% at $ 1.0373, while the yen and sterling were a touch firmer on the day.

Elsewhere, oil prices were firm, with Brent crude futures up 85 cents or 1% to $83.88 per barrel, while US West Texas Intermediate (WTI) crude futures rose 0.5% to $78.58 per barrel.

Dhara Ranasinghe Report; additional reporting by Kane Wu in Hong Kong and Marc Jones and Amanda Cooper in London, editing by Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

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