World shares were mixed on Monday after Wall Street closed its third straight winning week with a tiny gain.
In share trading, Germany’s DAX fell 0.1% to 15,907.92 and the CAC 40 in Paris gained 0.3% to 7,256.93. Britain’s FTSE 100 was down 0.3% at 7,481.86. The future for the S&P 500 and the Dow Jones Industrial Average were virtually changed.
Japan’s Nikkei 225 index broke its September peak, hitting a 33-year high, and then fell to 33,388.03, shedding 0.6%.
In South Korea, the Kospi was 0.9% higher, at 2,491.20. Australia’s S&P/ASX 200 edged 0.1% higher to 7,058.40. Taiwan’s Taiex was little changed. The SET in Bangkok dropped 0.1% as the state planning agency announced Monday that Thailand’s economy grew slower than expected in the last quarter due to weakness in exports and agriculture, despite strong consumer spending and a recovery in tourism.
Markets hope inflation has cooled enough for the Federal Reserve to finally stop its market-crunching hikes to interest rates.
The Fed has already raised its main interest rate to the highest level since 2001, trying to slow the economy and dent financial markets just enough to get inflation under control without causing a painful recession.
Now traders are trying to bet on when the Fed could actually begin cutting interest rates, something that can juice prices for investments and provide oxygen for the financial system. The Fed has said that it plans to keep rates high for a while to ensure that the battle against inflation is definitively won, but traders are thinking cuts could begin early in the summer of 2024.
In the bond market, the yield on the 10-year Treasury rose to 4.47% early Monday from 4.44% late Friday. Just a few weeks ago, it was above 5%, at its highest level since 2007 and undercutting prices for stocks and other investments.
Too steep a drop in Treasury yields and too big a rally in stock prices could conspire to work against Wall Street. Chair Jerome Powell said after the Fed’s last meeting on interest rates that it may not hike any more if the summer’s jump in Treasury yields and fall in stock prices remained “persistent.” That’s because such pressures could act like substitutes for more rate increases on their own.
One source of potential worry about inflation has been receding in recent weeks. Oil prices have plunged amid worries about a mismatch between too much crude supply and too little demand.
A barrel of U.S. crude for December delivery gained 50 cents to $76.54. It rose $2.99 to settle at $75.89 on late Friday, recovering some of its sharp losses from earlier in the week. But it’s still well below its perch above $93 in late September.
Brent crude, the international standard, rose 63 cents to $81.24 per barrel.
In currency trading, the U.S. dollar dropped to 148.85 Japanese yen from 149.58 yen. It had been trading near 152 yen to the dollar last week, but analysts said expectations for lower U.S. interest rates are driving sales of dollars, pushing the yen higher.
The euro cost $1.0927, rising from $1.0912.
