Shares Rise in Hopes of Easing Rates from the Fed

As signals of a weakening U.S. economy sparked hope that the Fed may reduce its rate rises, U.S. equities extended last week’s surge, and European markets rose.

The S&P 500 increased by 1.19%, the Nasdaq Composite increased by 0.86%, and the Dow Jones Industrial Average increased by 1.34%. The Nasdaq experienced a rebound after falling Tesla (NASDAQ: TSLA) Inc shares. Moreover, investors anticipate earnings reports from Alphabet (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), and Amazon.com in the coming days (NASDAQ: AMZN). The Fed’s relentless campaign of steep interest rate hikes appears to have the desired effect, as evidenced by the fact that U.S. business activity shrank for a fourth consecutive month in October. This raises hopes that the Fed will start reducing the rate at which the Fed funds target rate is raised.

Investors Remain Optimistic

According to Edward Moya, a market analyst at OANDA in New York, investors are more hopeful that inflation will decline. Moreover, they hope that the Fed could be quick to halt. For investors hoping for a Fed pause early in 2019, the flash PMIs purchasing managers index data revealed a considerable drop in the economy’s service and manufacturing sectors.

The dollar managed to advance against the yen despite a second alleged Japanese intervention. It reached 149.70 yen in early trade before falling again. According to projections made by Tokyo money market brokerage companies, Japan likely spent a record 5.4T to 5.5T yen ($36.16B-$36.83B) during its currency-buying intervention last Friday.

Japanese officials did not confirm the presence of interference. Moreover, the pound fluctuated in choppy trade. After winning the contest to head the Conservative Party, Finance Minister Rishi Sunak will take office as Britain’s next prime minister. This may lessen some political ambiguity that now hangs over the pound.