🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

Dovish policy signals keep stocks climbing

Published 12/20/2023, 12:35 AM
Updated 12/20/2023, 03:31 AM
© Reuters. Traders are pictured at their desks in front of the German share price index DAX board at the Frankfurt stock exchange on December 23, 2014.  REUTERS/Remote/Pawel Kopczynski/file photo
US500
-
JP225
-

(Corrects date of PCE deflator to Friday instead of Thursday in paragraph 10)

A look at the day ahead in European and global markets from Kevin Buckland

Dovish policy signals from opposite sides of the globe kept stocks climbing into Asian trading on Wednesday, boding well for the European open.

Bets for an early rate cut from the Federal Reserve continue to build, with Richmond Fed President Thomas Barkin's remark that "we're making good progress on inflation" taken as more fodder for the peak-rates and soft-landing narratives that have sent the Dow and Nasdaq to all-time highs, and the S&P 500 not far behind.

Traders now see a better than 3-in-4 chance for a quarter-point rate reduction by March, according to the CME's FedWatch tool, although Chicago Fed boss Austan Goolsbee could again push back against market pricing when the Wall Street Journal airs a podcast interview later on Wednesday.

The dollar was languishing near a four-month low - except against the yen, which has been undercut by the Bank of Japan's resolute dovishness in not only keeping uber-easy stimulus in place on Tuesday, but defying yen bulls by retaining its cautious policy guidance.

Japanese government bond yields slid to multi-month troughs in Tokyo, while benchmark U.S. Treasury yields continued to bump along near their lowest levels since July.

Japan's Nikkei climbed 1.6% as it rode the tailwinds from the U.S. and Japanese central banks to just shy of a 33-year peak.

ECB President Christine Lagarde may have warned against complacency last week, but investors seem confident that rate cuts are coming, particularly with the latest data showing a marked easing of price pressures in the euro zone.

Indicators to watch in European time include inflation figures from Germany and Britain, while Germany and the euro area will also release readings on consumer confidence.

The U.S. follows with its own consumer confidence numbers later in the day, although the main data point will be the Fed's favoured inflation gauge, the PCE deflator, on Friday.

Key developments that could influence markets on Wednesday:

-Germany GfK consumer sentiment (Jan), producer prices (Nov)

-UK CPI (Nov)

-Euro zone consumer confidence (Dec)

© Reuters. Traders are pictured at their desks in front of the German share price index DAX board at the Frankfurt stock exchange on December 23, 2014.  REUTERS/Remote/Pawel Kopczynski/file photo

-US consumer confidence (Dec), existing home sales (Nov)

(This story has been corrected to fix the date of the PCE deflator to Friday, not Thursday, in paragraph 10)

(By Kevin Buckland; Editing by Edmund Klamann)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.