Shares gain as rate cut bets pile up By Reuters

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<span>© Reuters. A man walks past an electric monitor displaying Japan&#8217;s Nikkei share average and recent movements, outside a bank in Tokyo, Japan, June 5, 2023. REUTERS/Issei Kato/file photo</span><br />
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<p>By Tom Wilson and Wayne Cole</p>
<p>LONDON/SYDNEY (Reuters) &#8211; World shares gained on Thursday as market wagers on ever-more aggressive interest rate cuts stretched a rally in U.S. stocks and bonds, while the dollar fell to five-month lows.</p>
<p>European shares added 0.2% to approach a 23-month high hit two weeks ago, and were on course for gains of about 13% this year.</p>
<p>Wall Street was set for gains, too, with up 0.1% to another record high and Nasdaq futures firming 0.2%.</p>
<p>The has climbed 14% in just two months to come within a whisker of its all-time closing peak, while its price to earnings ratio is up by a quarter on the year at 24.0.</p>
<p>The MSCI world equity index, which tracks shares in 47 countries, gained 0.3%.</p>
<p>An absence of major news has not stopped investors from ramping up bets on rapid-fire rate cuts next year from the Federal Reserve.</p>
<p>Futures now imply an 88% chance of a rate cut as early as March, a huge swing from a month ago when the probability was just 21%.</p>
<p>The market has about 157 basis points of easing priced in for 2024, and sees rates reaching 3.00-3.25% over 2025.</p>
<p>&#8220;The rapid decline in inflation is likely to lead the Fed to cut early and fast to reset the policy rate from a level that most participants will likely soon see as far offside,&#8221; wrote analysts at Goldman Sachs in a note.</p>
<p>&#8220;We expect three consecutive 25bp cuts in March, May, and June, followed by one cut per quarter until the funds rate reaches 3.25-3.5% in 2025 Q3. Our forecast implies 5 cuts in 2024 and 3 more cuts in 2025.&#8221;</p>
<p>Germany&#8217;s 10-year bond yield was steady near its lowest in more than a year.</p>
<p>Earlier, MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan added another 1.5%, to be up about 11% in two months and at its highest since August.</p>
<p>BOND BULGE</p>
<p>Yields on stood at 3.812%, having hit a five-month low overnight. The two-year yield was down at 4.273%, having been as high as 5.295% as recently as October. [US/]</p>
<p>The falls weighed broadly on the U.S. dollar and lifted the euro to its highest since July at $1.1129. The single currency was last at $1.1115, having gained 2% so far this month to within sight of its 2023 top of $1.1276.</p>
<p>The , which measures the U.S. currency against six rivals, fell to a fresh five-month low of 100.76. The index is on course for a 2.6% decline this year, snapping two straight years of strong gains.</p>
<p>Sterling reached a five-month top of $1.2816, after cracking resistance at $1.2794 overnight.</p>
<p>&#8220;Investors are placing more weight on Fed expectations driving currencies, than the signalling from other central banks like the ECB,&#8221; said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank.</p>
<p>&#8220;In part, that&#8217;s because the Fed also has more impact on the overall global risk environment, which has become more risk friendly and thereby also less USD positive.&#8221;</p>
<p>The dollar also lost ground to the yen at 140.995 yen , having shed 4.7% for the month so far. It is still up sharply for the year as the Bank of Japan takes a glacial approach to tightening its super-easy policies.</p>
<p>In an interview published on Wednesday, BOJ Governor Kazuo Ueda said he was in no rush to unwind those loose policies as the risk of inflation running well above 2% and accelerating was small.</p>
<p>Oil prices, which slid on Wednesday, remained subdued as concerns over supplies eased after major shippers announced they would return to the Red Sea. [O/R]</p>
<p> edged up 10 cents to $79.85 a barrel, while fell 5 cents to $74.14 per barrel. </p>
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<br /><a href="https://www.investing.com/news/stock-market-news/asia-shares-at-fivemonth-highs-as-rate-bets-pile-up-3264186">Source link </a></p><p>The post <a href="https://forextraderhub.com/shares-gain-as-rate-cut-bets-pile-up-by-reuters.html">Shares gain as rate cut bets pile up By Reuters</a> first appeared on <a href="https://forextraderhub.com">Forex Trader Hub</a>.</p>