Global stock markets rose slightly on Monday as investors awaited U.S. inflation data to be released the following day to gain further insight into the Federal Reserve’s interest rate hike trajectory.
After two weeks of consecutive gains, MSCI’s gauge of global equities — which tracks the performance of 48 developed and emerging economies — fluctuated between modest gains and losses, ultimately closing up 0.19 percent.
Global equities have climbed nearly five percent this month. It rebounds from October’s decline, triggered by risk aversion stemming from the Middle East conflict. Investors are now optimistic that major central banks may be nearing the end of their interest rate tightening cycle.
U.S., Asia-Pacific stocks
Stock markets in the U.S., in particular, have enjoyed a positive start to the month, driven by better-than-anticipated corporate earnings reports. However, equities have since closed mixed.
The S&P 500 slipped 3.69 points or 0.08 percent, ending Monday at 4,411.55. Among the S&P 500’s 11 major sectors, energy emerged as the top performer, closing 0.7 percent higher. Utilities experienced the most significant decline in the index, falling 1.2 percent.
The S&P healthcare index registered a 0.6 percent gain. Within the healthcare sector, dialysis company Davita Inc. stood out as the biggest percentage gainer, recording a 6.5 percent increase.
Other medtech companies also experienced notable gains, including Insulet, which surged 5.6 percent, Dexcom, which climbed 4.6 percent, and Abbott Labs, which advanced 1.9 percent.
Tesla ended the day over four percent higher, partially bolstering the consumer discretionary index. Declines in heavy-weight stocks such as Apple and Microsoft contributed to the S&P 500 technology index’s downturn.
Meanwhile, the Dow Jones Industrial Average edged higher by 54.77 points or 0.16 percent, to close at 34,337.87.
Contributing to the Dow’s positive performance, Boeing surged by four percent on Monday following a Bloomberg News report that China was contemplating resuming purchases of its 737 Max aircraft. Dubai’s Emirates Airlines also ordered 90 more Boeing 777X jets at the opening of the Dubai Airshow on Monday.
The Nasdaq Composite, which largely comprises tech stocks, dipped 30.37 points, or 0.22 percent, to finish at 13,767.74.
Asian equities edged higher on Tuesday local time, with major benchmarks posting modest gains. MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.49 percent, while Tokyo’s Nikkei climbed 0.36 percent. Australia’s S&P/ASX 200 index surged by 0.61 percent.
China shares advanced, with the benchmark blue-chip CSI 300 rising 0.40 percent and Hong Kong’s Hang Seng Index gaining 0.57 percent. The gains came ahead of a highly anticipated summit between U.S. President Joe Biden and China President Xi Jinping, scheduled for later this week.
Shifting focus
After Friday’s solid gains, investors are now waiting for Tuesday’s U.S. consumer price index (CPI). Headline inflation is expected to ease to 3.3 percent from 3.7 percent in September, while core prices are expected to remain unchanged.
“Top of mind this week will be Tuesday’s October consumer price index report where we are looking for core inflation to have gained additional speed for a third straight month,” analysts at TD Securities said in a note.
The report is particularly crucial given Fed Chairman Jerome Powell and policymakers’ recent remarks, which indicated uncertainty if the current interest rates are sufficient to combat inflation.
Based on the CME Group’s FedWatch tool, markets anticipate an 86 percent probability that the Fed will maintain current interest rates in December.
Aside from the CPI reading taking center stage, investors also grappled with a downgrade in the U.S. credit outlook.
On Friday, Moody’s revised the outlook for the U.S. credit rating from “stable” to “negative,” citing concerns over widening fiscal deficits and deteriorating debt affordability. This added to the prevailing cautious sentiment among investors.