LONDON: Equity markets mostly rose slightly Tuesday as traders assessed attempts by 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.
Asian and European stock markets mostly rose after Wall Street extended gains Monday, despite Federal Reserve officials tempering market predictions that the US central bank will next year slash borrowing costs by up to 1.5 percentage points as inflation cools.
“It is essential to recognise that the Fed will likely demand sustained improvement in inflation metrics over several months before implementing any rate cuts,” noted Stephen Innes at SPI Asset Management.
Top equity markets mostly down as Fed rate-cut rally fades
“This consideration supports the notion that the actual pivot in rates might not occur as rapidly as currently anticipated by the market.”
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 steadied a day after rallying as companies suspended transits in the Red Sea following attacks on cargo ships by Yemen’s Iran-backed Huthi rebels in acts of solidarity with Gaza.
The rebels have escalated attacks on tankers and other vessels, imperilling a transit route that 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 1100 GMT
London - FTSE 100: FLAT at 7,616.21 points
Paris - CAC 40: FLAT at 7,567.12
Frankfurt - DAX: UP 0.4 percent at 16,710.29
EURO STOXX 50: UP 0.2 percent at 4,531.19
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)
New York - Dow: FLAT at 37,306.02 (close)
Dollar/yen: UP at 144.82 yen from 142.73 yen on Monday
Euro/dollar: UP at $1.0936 from $1.0919
Pound/dollar: UP at $1.2702 from $1.2650
Euro/pound: DOWN at 86.10 pence from 86.31 pence
West Texas Intermediate: UP 0.1 percent at $72.53 per barrel
Brent North Sea crude: UP 0.1 percent at $78.04 per barrel
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