# Global shares rise, dollar rebounds as Fed seen on target for rate hike
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-07-18
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global shares rise, dollar rebounds as Fed seen on target
Meta Description: Dollar rebounds off 15-month low, global stocks up. Bank earnings & upbeat retail sales signal Fed interest rate hike. Market rallies on expectations.
URL: https://financedigest.com/global-shares-rise-dollar-rebounds-as-fed-seen-on-target-for-rate-hikehtml

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By Herbert Lash

NEW YORK (Reuters) – The dollar rebounded off a 15-month low and global stock markets rose on Tuesday as upbeat earnings on Wall Street and retail sales pointing to a resilient U.S. economy sealed expectations that the Federal Reserve will [hike interest rates next week](https://www.financedigest.com/hungary-cenbank-seen-hiking-100-bps-to-11-75-next-week-as-inflation-surges.html "Hungary cenbank seen hiking 100 bps to 11.75% next week as inflation surges").

Bank of America posted a 20% surge in second-quarter profit and Morgan Stanley [beat analysts’ estimates](https://www.financedigest.com/credit-agricole-beats-estimates-on-insurance-consumer-finance.html "Credit Agricole beats estimates on insurance, consumer finance"), suggesting companies will deliver results that surpass the market’s lowered expectations for this earnings season.

[Retail sales increased 0.2% last month](https://www.financedigest.com/hong-kong-may-retail-sales-rise-18-4-sixth-month-of-growth.html "Hong Kong May retail sales rise 18.4%, sixth month of growth"), the U.S. Commerce Department said, but core [retail sales](https://www.financedigest.com/uk-retail-sales-jump-unexpectedly-but-big-picture-bleak-2.html "UK retail sales jump unexpectedly, but big picture bleak") increased 0.6%, excluding automobiles, gasoline, building materials and food services. Headline data for May also was revised [higher to show sales gaining](https://www.financedigest.com/asia-stocks-nudge-higher-gains-capped-by-china-worries.html "Asia stocks nudge higher, gains capped by China worries") 0.5% instead of 0.3% as previously reported.

The dollar slid to a 15-month [low](https://www.financedigest.com/unilever-sees-chinese-consumer-confidence-at-historical-low-point.html "Unilever sees Chinese consumer confidence at ‘historical low point’") before rebounding as futures pointed to a 97.3% probability that the Fed will hike rates by 25 basis points at the conclusion of a two-day meeting on July 26, according to CME Group’s FedWatch Tool.

The dollar index rose 0.044%, while the euro slid 0.05% to $1.1228.

Analysts have been taking down estimates, setting a very low bar to clear, while last week’s inflation data gave the market new-found confidence that the Fed is very close to wrapping up its tightening campaign, said Jimmy Chang, chief [investment officer at the Rockefeller Global](https://www.financedigest.com/limited-support-for-central-bank-digital-currencies-in-global-investment-industry-survey.html "Limited support for central bank digital currencies in global investment industry survey") Family Office in New York.

Historically when you get to that stage when the Fed finishes rate hiking and the economy is still doing OK, the [market tends to rally,”](https://www.financedigest.com/world-shares-rally-as-china-offers-markets-a-hand.html "World shares rally as China offers markets a hand") Chang said. “That combination creates this Goldilocks scenario and I feel that we’re going through that phase.”

MSCI’s gauge of [stocks](https://www.financedigest.com/mutual-funds-vs-stocks-which-is-better.html "stocks") across the globe gained 0.51%, while in Europe, the pan-regional STOXX 600 index rose 0.62%.

On [Wall Street](https://www.financedigest.com/wall-street-gains-treasury-yields-rise-as-debt-ceiling-talks-progress.html "Wall Street gains, Treasury yields rise as debt ceiling talks progress"), the Dow Jones Industrial Average rose 1.06%, the S&P 500 gained 0.71% and the Nasdaq Composite added 0.76%, rebounding from early losses.

Asian stocks fell earlier in the session as markets caught up with growth [data from Monday showing the post-pandemic bounce in China’s](https://www.financedigest.com/chinas-low-copper-inventory-data-belie-sufficient-supply.html "China’s low copper inventory data belie sufficient supply") economy was over.

[Deutsche Bank](https://www.financedigest.com/citigroup-to-buy-deutsche-bank-license-in-mexico-for-wholesale-unit.html "Citigroup to buy Deutsche Bank license in Mexico for wholesale unit") said it was lowering its forecast for China’s economic growth this year, following similar moves on Monday by J.P. Morgan, Morgan Stanley and Citigroup.

[“China is super important to Europe,”](https://www.financedigest.com/unilever-downbeat-on-europe-china-consumer-sentiment.html "Unilever downbeat on Europe, China consumer sentiment") said Fiona Cincotta, senior markets analyst at City Index. There are a lot of concerns about what weakness in China could mean for Germany and the [German economy](https://www.financedigest.com/german-economy-likely-grew-in-q1-beating-expectations-bundesbank.html "German economy likely grew in Q1, beating expectations – Bundesbank"), and I think we’re seeing that being played on in the DAX, which is struggling to push higher.

Besides the Fed, the European [Central](https://www.financedigest.com/central-banks-opt-for-shock-and-awe-to-tame-inflation.html "Central banks opt for shock and awe to tame inflation") Bank and the Bank of Japan also hold policy meetings next week.

Expectations that the [Fed and the ECB will diverge on rate hikes](https://www.financedigest.com/dollar-slips-before-expected-fed-rate-hike.html "Dollar slips before expected Fed rate hike") have caused the dollar to weaken recently.

[Euro zone government bond yields](https://www.financedigest.com/euro-zone-yields-fall-as-us-payrolls-seen-easing-rate-hike-pressure.html "Euro zone yields fall as US payrolls seen easing rate-hike pressure") were down, with the German 10-year yield hitting its lowest since June 29 at 2.337%, down around 1.1 basis points on the day.

The yield on U.S. 10-year notes slipped 0.2 bps at 3.7951%.

Oil prices climbed more than 1% after China said it will act to support economic growth in the world’s biggest oil importer and on expectations the [Fed](https://www.financedigest.com/oil-prices-wobble-on-worries-over-china-economy-us-rate-path.html "Oil prices wobble on worries over China economy, US rate path") will stop raising interest rates soon.

Brent futures rose $1.13 to settle at $79.63 a barrel, while U.S. West Texas Intermediate (WTI) crude settled up $1.60 at $75.75.

Gold rose to a more than one-month high, bolstered by a softer dollar and [lower Treasury yields](https://www.financedigest.com/wall-st-ends-lower-treasury-yields-slide-as-data-fuels-recession-jitters.html "Wall St ends lower, Treasury yields slide as data fuels recession jitters"), with investors betting that recent U.S. economic data make the case for a pause in the [Fed’s interest rate hikes](https://www.financedigest.com/u-s-dollar-rallies-to-more-than-2-year-hike-on-steep-fed-rate-hike-outlook.html "U.S. dollar rallies to more than 2-year hike on steep Fed rate hike outlook") after next week.

U.S. gold [futures settled 1.2% higher](https://www.financedigest.com/us-futures-inch-up-stock-markets-ride-higher-on-cooler-inflation.html "US futures inch up; stock markets ride higher on cooler inflation") at $1,980.80 an ounce.

(Reporting by Herbert Lash, additional reporting by Elizabeth Howcroft in London, Selina Li in [Hong Kong; Editing by Chizu Nomiyama, Jonathan Oatis and Deepa Babington)](https://www.financedigest.com/luxury-yacht-owned-by-sanctioned-russian-oligarch-docked-in-hong-kong.html "Luxury yacht owned by sanctioned Russian oligarch docked in Hong Kong")


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