Global stocks rise, dollar gains as UK inflation bolsters sentiment



Global stocks are rising, and the dollar is rising as UK inflation boosted sentiment<br />













































July 19, 2023


Creation time: 09:29 PM


Last update: 09:29 PM



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New York, July 19 (BNA): Global stocks rose and the dollar strengthened on Wednesday after a sudden lull in British inflation boosted risk-off sentiment in markets that expect the Federal Reserve to raise interest rates next week for the last time.


The dollar rebounded after sentiment was boosted by UK inflation, which fell more-than-expected in June to its slowest pace in more than a year at 7.9%. The reading led to a sharp decline in the pound against other major currencies.


The dollar index rose 0.378% and the euro fell 0.3% to $1.1192, Reuters reported.


Gold prices hovered near an eight-week peak reached on Tuesday, and oil prices rose more than 1% on expectations that the Federal Reserve will finish its most aggressive rate hike in more than four decades when it wraps up its two-day meeting on July 26. .


Stocks on Wall Street rose mostly as investors looked to Goldman Sachs’ weak second-quarter earnings to take comfort in strong earnings from smaller players in the banking sector.


Citizens Financial (CFG.N) and M&T Bank (MTB.N) beat Wall Street’s estimates for second-quarter earnings, benefiting from a rapid rate hike by the Federal Reserve. KBW Bank Index (.BKX) rose 2.73%, posting gains for the third consecutive day.


“Obviously, the market is looking forward to the Fed meeting,” said Reese Williams, chief strategist at Spouting Rock Asset Management in Bryn Mawr, Pennsylvania.


“In the short term, we’re in a Goldilocks scenario where good news is good news and bad news is good news,” Williams said, adding that if the Fed signals next week that there could be more rates in store, that would be the case. Last hike flips.


The pan-European STOXX 600 Index (.STOXX) rose 0.26% and the MSCI worldwide stock index (.MIWD00000PUS) rose 0.13%.


On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.4%, the S&P 500 Index (.SPX) rose 0.24%, and the Nasdaq Composite Index (.IXIC) fell 0.04%.


With US stocks seemingly relentless rising – the Dow Jones is on track for its eighth straight gain – investors are worried about the earnings outlook and valuations.


“Analysts’ earnings expectations are falling. That’s the biggest discrepancy in this rosy picture,” said Brad Conger, vice president of investment at Hertle Callahan & Associates in Conshohocken, Pennsylvania.


“You don’t see the price strength being confirmed by future expectations and that’s the most troubling fly in the ointment, if you will,” Conger said.


Treasury yields have fallen at the long end of the yield curve as investors bet that the Federal Reserve is nearing the end of its rate-raising cycle.


The yield on the benchmark 10-year Treasury note fell 2.5 basis points, to 3.764%. Fed funds futures are pricing the Fed’s overnight lending rate to be 4.5% annually from now, down from a peak of 5.4% in November.


The two-year Treasury yield, which typically moves in line with interest rate expectations, rose 1.5 basis points to 4.768%.


Eurozone bond yields fell after British inflation data added to signs that price pressures are easing globally. The German 10-year Bund yield fell 0.4 basis points, at 2.393%.


Oil prices rose, supported by shrinking US crude supplies, China’s pledge to revitalize its economic growth and expectations that the Federal Reserve will stop raising interest rates soon.


US crude recently rose 0.36% to $76.02 a barrel, and Brent crude reached $79.96, up 0.41% on the day.


Spot gold fell 0.08 percent to $1,977.04 an ounce.


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