NEW YORK/MILAN- A gauge of global equity markets edged higher while 10-year US Treasury yields eased back from the 3 percent level as investors remained cautious, expecting the Federal Reserve to hike rates by the most in a single day since 2000.
In a sign of the challenge the Fed faces in fighting inflation, data showed US job openings hit a record in March as worker shortages persisted, suggesting employers may need to raise wages.
Investors expect the Fed hike rates by half a percentage point on Wednesday, and to detail plans to reduce its $8.9 trillion balance sheet. The US central bank raised its policy interest rate by 25 basis points in March.
Major stock indices in Europe rose, as did Wall Street’s big equity benchmarks.
MSCI’s all-country world index rose 0.4 percent and the pan-European STOXX 600 index closed up 0.53 percent after surviving a “flash crash” in Nordic markets on Monday caused by a Citigroup sell order trade.
The Dow Jones Industrial Average rose 0.17 percent, the S&P 500 gained 0.48 percent and the Nasdaq Composite added 0.16 percent.
“We could get a dead-cat bounce after the Fed meeting if it’s not more hawkish than what the market has been fearing,” said Jimmy Chang, chief investment officer at the Rockefeller Global Family Office, adding investor anxiety was running high.
“Potentially there could be a near-term rebound, but I do think the broader trend is still very cautious on the equity side.”
Nine of the S&P 500’s sectors rose, led by a 2.65 percent gain in energy, while oil and gas jumped 4.1 percent in Europe to lead markets there.
Overnight in Asia, Australia’s central bank raised its key rate by a bigger-than-expected 25 basis points, lifting the Aussie dollar as much as 1.3 percent and hitting local shares.
The Bank of England is expected to raise rates on Thursday for the fourth time in a row. – Reuters
