London (AFP) – US stocks pushed further into record territory on Tuesday as bond yields fell despite attempts by US Federal Reserve officials to dampen expectations for several interest rate cuts next year.
In foreign exchange, the yen slid against the dollar after the Bank of Japan decided against a shift away from its policy of not raising rates.
Both the Dow and tech-heavy Nasdaq set new intraday records during morning trading, with the S&P 500 also within striking distance of its 2022 record high.
US and European stock markets have charged higher in recent weeks to set record highs on speculation that central banks will begin next year to cut interest rates that they had hiked to stifle inflation.
“The steam engine has been fueled by diving market rates, rising rate-cut expectations, and a steady view that the economy will enjoy a soft landing in spite of the Fed’s prior rate hikes,” said Patrick O’Hare at Briefing.com.
While US Federal Reserve officials on Monday tried to temper market predictions that the US central bank will next year slash borrowing costs by up to 1.5 percentage points as inflation cools, US bond yields slid indicating market expectations that rates will fall.
“The bid this morning isn’t a robust one, but once again, the key consideration after the run the stock market has had is that the move to sell is even less pronounced,” O’Hare added.
European stocks ended the day in positive territory as European bond yields also fell, while Asian stocks were mostly higher
.
– Bank of Japan – The Tokyo stock market closed up more than one percent and the yen sank against the dollar after the Bank of Japan (BoJ) opted to stand pat on monetary policy, as expected, and provided no guidance on its plans for the new year.
Speculation had been swirling in recent days that the BoJ was close to shifting away from its long-running, ultra-loose monetary policy as inflation picks up in Japan.
Elsewhere on Tuesday, oil prices added to Monday’s rally on companies suspending transit via the Red Sea following attacks on cargo ships by Yemen’s Iran-backed Huthi rebels in acts of solidarity with Gaza.
“While in the short term, any price shock is likely to be temporary, if the situation becomes a more permanent state of affairs, or escalates, we could see prices continue to move higher,” said CMC Markets analyst Michael Hewson.
The rebels have escalated attacks on tankers and other vessels, imperilling a transit route that, according to the International Chamber of Shipping, carries up to 12 percent of global trade.
In corporate news, Nippon Steel lost almost three percent in Tokyo after saying Monday it would buy US Steel for $14.1 billion, creating the world’s second-largest steel company
.
– Key figures around 1630 GMT – New York – Dow: UP 0.6 percent at 37,524.81 points London – FTSE 100: UP 0.3 percent at 7,638.03 (close) Paris – CAC 40: UP 0.3 percent at 7,571.67 (close) Frankfurt – DAX: UP 0.6 percent at 16,744.41 (close) EURO STOXX 50: UP 0.3 percent at 4,535.40 Tokyo – Nikkei 225: UP 1.4 percent at 33,219.39 (close) Hong Kong – Hang Seng Index: DOWN 0.8 percent at 16,505.00 (close) Shanghai – Composite: UP 0.1 percent at 2,932.39 (close) Dollar/yen: UP at 143.66 yen from 142.73 yen on Monday Euro/dollar: UP at $1.0979 from $1.0919 Pound/dollar: UP at $1.2753 from $1.2650 Euro/pound: DOWN at 86.06 pence from 86.31 pence West Texas Intermediate: UP 1.5 percent at $73.55 per barrel Brent North Sea crude: UP 1.6 percent at $79.21 per barrel burs-rl/cw
