Global equities were down and Wall Street indexes were mixed Tuesday and the dollar rose, as investors awaited fresh inflation data and further economic news later in the week.
Gold prices hit a two-week high, boosted by rising geopolitical tensions and expectations of a third U.S. rate cut by the Federal Reserve next week.
Traders awaited U.S. inflation data due on Wednesday and a meeting by the European Central Bank on Thursday.
The Dow Jones Industrial Average fell 27.58 points, or 0.06%, to 44,374.70, the S&P 500 fell 5.28 points, or 0.09%, to 6,047.19 and the Nasdaq Composite rose 4.71 points, or 0.02%, to 19,739.73.
The pan-European STOXX 600 index fell 0.5% on Tuesday, ending an eight-session winning run, with luxury stocks leading declines after weak trade data out of China.
Investors will be closely watching Wednesday’s consumer price index report for insight into the trajectory of U.S. inflation and ensuing Federal Reserve policy. A Reuters poll of economists found 90% anticipate a 25 basis point rate cut from the Fed at its Dec. 18 meeting. With an ECB rate cut all but certain, investors will be watching for clues about its policy path.
Another boost to U.S. sentiment was a report showing small business confidence climbing to its highest level in nearly 3-1/2 years in November.
Investors in emerging markets were also attuned to Brazilian President Luiz Inacio Lula da Silva undergoing surgery in Sao Paulo to drain a bleed on his brain linked to a fall at home in October.
MSCI’s gauge of stocks across the globe fell 2.92 points, or 0.34%, to 867.93.
In China, officials had shifted their monetary policy stance from “prudent” to “moderately loose” ahead of the target-setting Central Economic Work conference this week, mirroring their response in previous crises.
The Politburo meeting announcement “adopted (the) strongest tone in decades,” said Chen Shujin, head of China financial and property research at Jefferies.
Traders are also expecting rate cuts in Europe and Canada later this week and are leaning towards a 50 basis point cut in Switzerland as authorities may tap the brakes on the franc’s relentless rise against the euro.
The yield on benchmark U.S. 10-year notes rose 2.7 basis points to 4.226%, from 4.199% late on Monday.
The dollar index, which measures the greenback against a basket of currencies, including the yen and the euro,rose 0.23% to 106.40, with the euro down 0.26% at $1.0525.
Spot gold rose 1.24% to $2,691.66 an ounce. U.S. gold futures rose 1.25% to $2,698.20 an ounce.[GOL/]
Elsewhere in commodities, oil prices rose on the China stimulus and possible tight supply in Europe. Investors assessed the potential regional fallout from the overthrow of Syrian President Bashar al-Assad.
U.S. crude rose 0.57% to $68.76 a barrel and Brent rose to $72.39 per barrel, up 0.35% on the day.
A look at the day ahead in European and global markets from Tom Westbrook
China’s equity markets have chosen to run with the authorities’ latest vague promise of support for the sputtering economy, with stocks surging to their highest levels in nearly a month.
The state-media readout on Monday from China’s Politburo heralded a shift from “prudent” to “moderately loose” monetary policy as well as a desire to boost consumption.
As with similar pronouncements in September there were no firm details but, as then, equity investors were determined not to miss out.
Warning signs, or at least more circumspection, seemed evident in China’s foreign exchange market, which hardly budged, and bonds, which rallied while pushing yields to record lows - showing doubt over whether growth is really going to pick up.
As China-watcher and Carnegie China senior fellow Michael Pettis noted on X, plenty of debt has piled up under “prudent” conditions without re-invigorating domestic demand.
“The problem with Chinese monetary policy until now has not been that its tightness has led to slow growth and low inflation, but rather that its looseness, directed almost exclusively at the supply side of the economy, has accommodated deeper imbalances and deflation,” he said.
European stocks already caught a boost from China’s policy shift, with mining and luxury goods gaining on Monday, but the extended rally in China may lend another session of support.
The data calendar is otherwise bare ahead of a busy few days. U.S. inflation data is due on Wednesday ahead of a central bank meeting in Canada and rate decisions are due on Thursday from the European Central Bank and the Swiss National Bank.
The ECB is seen cutting by 25 basis points and the Bank of Canada by 50 bps. Switzerland could also go by 50 bps, given how much it has been spending to restrain the Swiss franc.
Australia’s central bank rounded out its year on Tuesday with a dovish surprise for traders, dropping a reference to “not ruling anything in or out” for its next policy move and instead noting it had gained confidence in inflation returning to target.
The Australian dollar fell about 0.6% to $0.6401.
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