Global stock markets drift higher ahead of US Fed meet, earnings - GulfToday

Global stock markets drift higher ahead of US Fed meet, earnings

opec oil jack

Picture used for illustrative purpose.

Global stock markets gained on Monday at the start of a busy week featuring Federal Reserve and Opec meetings and major US corporate earnings.

After a mixed showing in Asia, European stocks turned higher in afternoon trading. Wall Street’s main stock indices opened higher, with the Dow adding 0.2 percent.

Dollar note
Picture used for illustrative purpose.

The dollar was mixed the Fed’s rate decision Wednesday. Oil prices sank on stubborn fears over coronavirus-hit demand, before an output gathering the same day of Opec crude producers and allies.

“There is not a lot of direction... We are in a holding pattern,” noted analyst Neil Wilson at trading site

Investors were alarmed by spiking Covid-19 infections in India, but sentiment remains soothed by US and UK vaccination drives -- and the vast amount of stimulus sloshing around the world economy.

“Vaccinations in the US and UK are positive, a startling rise in infections in India is a negative, but markets are largely looking through the bad with ample monetary and fiscal support,” added Wilson.

The Federal Reserve’s two-day meeting ending Wednesday comes before the US posts its latest economic growth data later this week.

Investors are meanwhile awaiting this week’s Wall Street earnings from giants including Tesla, Facebook and Apple.

“The US economy is in a much better position compared to a few months ago, thanks to government stimulus and the fast pace of Covid vaccinations,” noted ThinkMarkets analyst Fawad Razaqzada.

“So far, the strength of US data has not prevented the Fed from keeping the quantitative easing taps wide open.

“But if the improvement in data persists then it will only be a matter of time before the Fed tapers its emergency stimulus measures.”

 Picture used for illustrative purpose.

Wall Street advanced Friday on strong readings for US and European manufacturing and services activity, eclipsing worries over President Joe Biden’s plan to almost double capital gains tax.

However, Biden’s $2.25-trillion infrastructure plan could take longer to get through Congress than hoped after a member of his own Democratic Party opposed the size of it and backed a slimmed-down version put forward by Republicans.

TD Ameritrade analyst JJ Kinahan said “this week is looking pretty busy on a trio of fronts-earnings, economic data and monetary policy.”

A number of big name firms like Tesla, Apple, Microsoft, Amazon, Google-parent Alphabet, Boeing, Caterpillar, McDonald’s, Mastercard, Chevron, and ExxonMobil.

But overall, about one-third of the S&P 500 is reporting earnings this week.

Joe Biden. File

In addition to the Fed’s latest policy meeting, this week investors are due to get an initial estimate of first quarter GDP, US President Joe Biden is due to make his first address to Congress and may unveil another big spending plan.

Asia began Monday on a strong note but struggled in some markets, with Tokyo, Seoul, Singapore, Taipei, Manila and Bangkok all up but Hong Kong, Shanghai, Sydney and Jakarta falling.

Still, trading floors remain on edge over spiking virus infections around the world, with India seeing five straight days of more than 300,000 new cases in a surge that has overwhelmed hospitals and left severe oxygen and medicine shortages.

Mumbai stocks however rose more than one percent on Monday.

The Canadian dollar strengthened to its highest level in nearly six weeks against the greenback on Monday as investors weighed the prospects of the U.S. Federal Reserve maintaining its dovish stance at a policy meeting this week. Most analysts expect Fed Chairman Jerome Powell to say on Wednesday that talk of withdrawing monetary easing is premature, which could put downward pressure on Treasury yields and the U.S. dollar . In contrast, the Bank of Canada last week signaled it could start hiking interest rates next year and cut the pace of bond purchases. Investors in Canada are shunning interest-rate sensitive stocks, seeking inflation protection and betting on a steeper yield curve as the Bank of Canada leads global central banks in shifting to a more hawkish stance.

The Canadian dollar was trading 0.3% higher at 1.2439 to the greenback, or 80.39 U.S. cents, having touched its strongest intraday level since March 18 at 1.2432. Speculators have raised their bullish bets on the Canadian dollar to the highest in seven weeks, data from the US. Commodity Futures Trading Commission showed on Friday. As of April 20, net long positions had increased to 13,246 contracts from 2,406 in the prior week.

The price of oil, one of Canada’s major exports, fell on fears that surging COVID-19 cases in India will dent fuel demand in the world’s third-biggest oil importer. US crude prices were down 1.9% at $60.95 a barrel. Canadian government bond yields edged higher across the curve.

The 10-year was up nearly one basis point at 1.526%. Canadian retail sales data for February is due on Wednesday, while GDP data for the same month is due on Friday.

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