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Wall St steady ahead of Fed’s last rate decision for 2022 By Reuters


©Reuters. FILE PHOTO: People walk past a screen showing the Hang Seng stock index in Central District, in Hong Kong, China, October 25, 2022. REUTERS/Lam Yik/File Photo

By Lawrence Delevigne

(Reuters) – Wall Street shares rose on Wednesday, while government bonds and the dollar were muted ahead of a US Federal Reserve meeting later in the day and decisions by central banks in Europe and Britain on Thursday.

Trading was subdued a day after stock prices rose and the US dollar fell sharply as consumer price data showing a slowdown in inflation raised hopes that central banks will stop raising rates in early 2023 interest rates.

The US consumer price index rose 0.1% last month, 0.2 percentage points slower than economists had expected. In the 12 months through November, aggregate CPI rose 7.1% – the lowest rate in about a year. UK inflation is also more subdued than expected in November, data from Wednesday showed.

The was up 0.57%, the gain was up 0.47% and the added was up 0.37% shortly after noon.

The MSCI All World stock index gained about 0.4%, with European stocks falling but Asian markets rising overnight. It was up more than 1% the previous day.

On the foreign exchange markets, the dollar fell for the second day in a row. The latter fell 0.4% against the Japanese yen, while the euro rose 0.3% against the greenback.

The broader was about 0.33% lower at $103.73 after reaching a six-month low of 103.57 the previous day.

The dollar, a safe haven boosted by US rate hikes this year, is down about 9% from a two-decade high in September on expectations that central banks will soon stop raising rates .

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Susannah Streeter, senior market analyst at Hargreaves Lansdown, said investors were in a “wait and see” mood ahead of the Fed’s interest rate decision.

“There was that pop that we saw in the markets, but then maybe the realization dawns that it’s not necessarily going to be an easy road,” she said of US inflation. “It’s a long way down.”

European equities were flat, with the entire continent down 0.02% after rising 1.3% in the previous session.

In Asia, MSCI’s broadest index of Asia-Pacific equities outside of Japan rose 1%, with the easing of China’s COVID-19 restrictions boosting sentiment.

“It’s hard to see where more good news will come from on the inflation front,” said Jonas Goltermann, senior global markets economist at Capital Economics. “The question for next year is whether we go all the way back to 2%.”

FED FORWARD

Markets expect the Fed to slow the pace of rate hikes when it announces its decision at 2pm EST (1900 GMT) and raises its target range for fund rates by 50 basis points to between 4.25% and 4.5%.

Much of the focus will be on the “dot plot” chart that will show committee members’ projection of future interest rate movements and the tone of Fed Chairman Jerome Powell during his press conference.

The median projection in September assumed the Fed Funds rate would peak at around 4.6% next year, but some analysts think the Fed could go higher.

“The market wants to know if the Fed will change its stance on the dot plot,” said Tareck Horchani, head of trading at Prime Brokerage at Maybank Securities in Singapore.

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The yield on 10-year US Treasury bonds remained little changed at 3.507%, after falling 11 basis points on Tuesday. Revenues move inversely to prices.

RAW MATERIALS INCLUDE PROFITS

In commodities, oil prices rose again on Wednesday after OPEC and the International Energy Agency forecast a recovery in demand over the next year and hoped for a slowdown in US interest rate hikes alongside inflation.

rose 2.84% to $77.53 a barrel to stand at $82.82, up 2.65% on the day.

Expectations for less aggressive monetary policy from the Fed also helped keep gold prices above the $1,800 an ounce pivot. The US was down 0.08% to $1,812.40 an ounce.

rose slightly despite the arrest of FTX Exchange founder Sam Bankman-Fried, who was charged with fraud by US prosecutors. It was last up 1.85% to $18,099.

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