Stocks surge on hopes interest rate hikes will slow

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Global stocks gained on Tuesday and the dollar slid amid growing hopes the Federal Reserve could ease its interest-rate hiking plans.

Frankfurt and Paris equities each soared around four percent in value after Tokyo gained 3.0 percent, while London won 2.6 percent.

The Federal Reserve and other central banks have raised interest rates rapidly to tame soaring inflation, but the monetary tightening has raised fears it could plunge countries into recession.

But Wall Street enjoyed a bumper start to the fourth quarter after an industry survey released Monday showed US manufacturing growth slowed more than expected in September to its weakest in more than two years, and pricing pressures eased.

“Weaker-than-expected manufacturing data from the US was taken as a signal that rising interest rates may be having some effect on cooling demand for goods,” said Interactive Investor analyst Richard Hunter.

The yield on the 10-year US Treasury, a proxy for interest rates expectations, retreated further as investors bet that weakening economic data will prompt a similar pullback from the Fed.

Sydney soared 3.8 percent after the Reserve Bank of Australia lifted interest rates by less than expected.

Investors will focus later this week on Friday’s all-important US employment report for the latest reading on the health of the world’s biggest economy, but new data Tuesday showed a dramatic decline in job openings in August.

– Sterling extends gains –

The 13 members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their 10 allies headed by Moscow will hold Wednesday their first in-person meeting at the group’s headquarters in Vienna since March 2020.

The pound extended gains after breaking back above $1.14, having last Monday tanked to a record low $1.0350. The euro rose around 1.7 percent against the greenback.

New York – Dow: UP 2.8 percent at 30,316.32 (close)

New York – Nasdaq: UP 3.3 percent at 11,176.41 (close)

Frankfurt – DAX: UP 3.8 percent at 12,670.48 (close)

EURO STOXX 50: UP 4.3 percent at 3,484.48 (close)

Hong Kong – Hang Seng Index: Closed for a holiday

Pound/dollar: UP at $1.1477 from $1.1323 on Monday

Euro/pound: UP at 87.03 pence from 86.77 pence

Brent North Sea crude: UP 3.4 percent at $91.80 per barrel

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Originally published as Stocks surge on hopes interest rate hikes will slow


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