World stocks at highest in over a year on rate cut bets
Business
World stocks at highest in over a year on rate cut bets
NEW YORK/LONDON (Reuters) - World stocks rallied to their highest levels in more than a year on Wednesday, while the U.S. dollar hit a five-month low, as expectations mounted major central banks such as the Federal Reserve will start to cut interest rates early next year.
The jovial mood boosted the MSCI's gauge of stocks across the globe (.MIWD00000PUS) by 0.33% to a level not seen since October 2022.
On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.16%, while the S&P 500 (.SPX) and the Nasdaq Composite (.IXIC) were flat.
European shares (.STOXX) were also little changed, with trade subdued given public holidays across the region on Monday and Tuesday.
Analysts said the main risk for markets was that rates might not fall as fast as expected.
"If global equity markets have one Achilles' heel going into January 2024, it is the expectation that the Fed will be methodically and consistently cutting interest rates throughout the year," said Nicholas Colas, Co-founder of DataTrek Research.
In line with expectations of lower interest rates, the benchmark 10-year Treasury yield slipped to 3.837%, and the 2-year yield retreated to 4.2643%.
Expectations of rate cuts also dragged on the U.S. dollar , which fell 0.434% against a basket of six major currencies to a level last seen on Jul. 27.
A risk-on mood in world markets and a sluggish dollar lifted the euro by 0.59% to $1.1107, more than a four-month peak.
