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By Sinéad Carew
New York (Reuters) -MSCI’s global stock index was gaining ground on Tuesday and U.S. Treasury yields were falling slightly as investors focused on the prospect of 2024 interest rate cuts while the U.S. dollar rose against the yen after the Bank of Japan kept rates steady.
Oil futures extended the previous session’s gains, after attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea disrupted maritime trade, forcing companies to reroute.
The yen fell against the dollar after the Bank of Japan kept its ultra-low interest rates unchanged and made no change to its dovish policy guidance, dashing some traders’ hopes it would signal a near-term end to negative interest rates.
U.S. Treasury yields edged lower but held above multi-month lows reached last week as investors continued to monitor comments from Fed officials for indications on when the U.S. central bank is likely to begin cutting interest rates.
Treasury yields have fallen since Fed chair Jerome Powell took an unexpectedly dovish tone on Wednesday but the market has fluctuated as other speakers such as Chicago Federal Reserve President Austan Goolsbee pushed back against rate cut bets.
“The Fed has turned seemingly very dovish. They’ve basically said they’re done raising rates as long as inflation stays on its current course of moderating,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“The market has interpreted probably over optimistically that we’re going to see significant rate cuts in approximately six months. To us, that’s possible but not guaranteed. There’s so much that can happen between now and then.”
On Wall Street, the Dow Jones Industrial Average rose 216.77 points, or 0.58%, to 37,522.79, the S&P 500 gained 20.82 points, or 0.44%, to 4,761.38 and the Nasdaq Composite added 64.91 points, or 0.44%, to 14,970.10.
MSCI’s gauge of stocks across the globe gained 0.57% after earlier touching its highest level since late March 2022. The index has gained almost 15% since late October.
The pan-European STOXX 600 index rose 0.41%.European Central Bank member Francois Villeroy de Galhau said interest rates should be lowered in 2024 and that inflation should return to the ECB’s 2% target by 2025 at the latest.
At the central bank’s meeting last week, ECB President Christina Lagarde had pushed back against market bets on imminent rate cuts, but markets were not convinced. Dovish ECB policymaker Yannis Stournaras also told Reuters on Monday that the ECB must see inflation stable at below 3% by the middle of next year before beginning to lower rates.
In U.S. Treasuries, benchmark 10-year notes were down 4.7 basis points to 3.909%, from 3.956% late on Monday. The 30-year bond was last down 4.9 basis points to yield 4.0196%. The 2-year note was last was down 1.5 basis points to yield 4.4415%.
In currencies, while the U.S. dollar gained against the yen, it was broadly softer against other majors, weighed down by expectations for interest rate cuts next year.
The Japanese yen weakened 0.63% versus the greenback at 143.67 per dollar, while the dollar index, which measures the greenback against a basket of major currencies, fell 0.381%.
The euro was up 0.49% at $1.0976 while Sterling was last trading at $1.2746, up 0.82% on the day.
In commodities U.S. crude recently rose 1.56% to $73.60 per barrel and Brent was at $79.23, up 1.64% on the day.
In precious metals, gold prices firmed as U.S. dollar and Treasury yields slipped, while investors strapped in for U.S. economic data due this week that could provide more clarity on the Fed’s interest rate path.
Spot gold added 0.9% to $2,045.01 an ounce. U.S. gold futures gained 0.81% to $2,042.70 an ounce.
(Additional reporting by Elizabeth Howcroft in London, Rae Wee in Singapore and Kantaro Komiya in Tokyo; Editing by Ed Osmond and Nick Zieminski)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.