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GLOBAL MARKETS – Global stocks rise after Fed meeting notes hint at future rate hikes

Global stocks rose on Wednesday after notes from the US Federal Reserve’s early May meeting showed a strong likelihood that the world’s most powerful central bank would approve two more half-percentage-point rate hikes in the coming months. Wall Street ended higher as investors were encouraged by Fed policymakers unanimously rating the US economy as very strong as they struggled to rein in inflation without triggering a recession. .

All attendees at the May 3-4 Fed meeting backed a half-percentage-point rate hike — the first of this magnitude in more than 20 years — and “most attendees” judged that further hikes of this magnitude would be “probably appropriate” at the Fed’s policy meetings in June and July, according to meeting minutes. The MSCI gauge of stocks across the world gained 0.70% as of 4:15 p.m. EDT (2015 GMT), and Europe’s STOXX 600 rose 0.63%.

The Dow Jones Industrial Average rose 191.66 points, or 0.6%, to 32,120.28, the S&P 500 gained 37.25 points, or 0.95%, to 3,978.73 and the Nasdaq Composite added 170.29 points, or 1.51%, to 11,434.74. Earlier on Wednesday, the Reserve Bank of New Zealand raised interest rates by half a point. While this decision was expected, the RBNZ warned that bigger and faster increases could become necessary.

ANZ chief economist Sharon Zollner said the Fed’s minutes showed it also believes “big upside now buys flexibility later,” Zollner wrote. Investors still fear that rate hikes could cripple the world’s largest economy.

Nicholas Colas, co-founder of DataTrek Research, said U.S. markets, which have been misstepping in recent weeks, will bottom out once the Fed signals inflation has started to ease. “The Fed uses stock prices as a primary tool in its fight against inflation,” Colas wrote in a note Wednesday. “The fall in stock prices induces companies to stop hiring so aggressively and fuel wage inflation. They also create an inverse wealth effect, which should reduce consumer spending.”

The U.S. dollar index – which measures the currency against six major rivals – ended a two-day losing streak to rise 0.393%. The euro fell 0.56% to $1.0674. DISLOCATION

U.S. new home sales fell 16.6% month-on-month in April, the biggest drop in nine years, and new orders for U.S.-made capital goods increased less than expected in April. Falling orders for capital goods signaled some moderation in business capital spending at the start of the second quarter, and headwinds are mounting as interest rates rise and financial conditions tighten.

The yield on 10-year Treasury bills slipped 1.5 basis points to 2.745% after falling in the morning to 2.708%, a low last seen on March 14. The two-year US Treasury yield, which typically moves in line with interest rate expectations, was down 1.5 basis points to 2.506%. Investors in Asia had remained nervous that growth would be hurt by the effects of China’s lingering COVID-19 lockdowns, which threaten to undermine recent stimulus measures in the world’s second-largest economy.

Emerging market stocks rose 0.19%. MSCI’s broadest index of Asia-Pacific stocks outside Japan closed 0.25% higher, while Japan’s Nikkei lost 0.26%. Australian and Korean stocks rose 0.4%, and Taiwan’s weighted index and Hong Kong’s Hang Seng rose 0.8% and 0.2%, respectively. Among major commodities, spot gold fell 0.6% to $1,853.91 an ounce.

Oil prices rose on Wednesday, supported by tight supplies. Brent crude futures for July settled 47 cents at $114.03 a barrel, while U.S. West Texas Intermediate (WTI) crude for July delivery ended up 56 cents at 110.33 $ per barrel.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)