# Stocks rise, U.S. yields slip as markets await Fed rate hike
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-03
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Equity Markets Rise as Investors Await Fed Rate Hike
Meta Description: Read about investors' caution as Federal Reserve plans to hike rates aggressively. Stock indices in Europe rise, while U.S. Treasury yields slide.
URL: https://financedigest.com/stocks-rise-u-s-yields-slip-as-markets-await-fed-rate-hikehtml

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By Herbert Lash and Danilo Masoni

NEW YORK/MILAN (Reuters) -A gauge of global equity markets edged higher on Tuesday while 10-year U.S. Treasury yields slid from the 3% level as [investors remained](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") cautious, expecting the Federal Reserve to hike rates by the most in a single day since 2000 to curb inflation.

Feeding [inflation worries](https://www.financedigest.com/dollar-stronger-as-inflation-worries-dampen-risk-sentiment.html "Dollar stronger as inflation worries dampen risk sentiment"), data showed U.S. job openings [hit a record in March as worker shortages persisted](https://www.financedigest.com/uk-consumer-mood-hits-one-year-high-but-financial-gloom-persists.html "UK consumer mood hits one-year high, but financial gloom persists"). This suggested employers may need to raise wages, which likely would increase [consumer prices](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain").

Investors expect the [Fed to hike rates](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") by half a percentage point on Wednesday, and to detail plans to reduce its $8.9 trillion balance sheet. The U.S. central bank [raised its policy interest rate](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") by 25 basis points in March.

Major stock indices in Europe rose, but [Wall Street](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") eked out smaller gains as traders braced for a potentially more aggressive decision by policymakers on Wednesday.

The Fed’s not going to be [worried if eventually these next few rate hikes](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike") start to hurt growth and lead to some job losses, because right now the economy is on solid footing,” said Ed Moya, senior market analyst at OANDA.

MSCI’s all-country world index rose 0.39% and the pan-European STOXX 600 index gained 0.53% the day after a “flash crash” in Nordic [markets caused by a trade](https://www.financedigest.com/the-benefits-of-social-trading-in-a-volatile-market.html "The benefits of social trading in a volatile market") involving a single Citigroup sell order.

The Dow Jones [Industrial Average closed](https://www.financedigest.com/leading-blockchain-firm-to-unveil-decentral-project-at-official-consensus-industry-closing-event.html "Leading Blockchain Firm to Unveil Decentral Project at Official Consensus Industry Closing Event") up 0.2%, the S&P 500 gained 0.48% and the Nasdaq Composite added 0.22%.

We could get a dead-cat bounce after the [Fed meeting if it’s not more hawkish than what the market](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") has been fearing,” said Jimmy Chang, chief investment officer at the Rockefeller Global Family Office, “but I do think the broader trend is still very cautious on the equity side.

Nine of the S&P 500’s sectors rose, led by a 2.87% gain in energy, while [oil and gas jumped 4.1% in Europe](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") to lead markets there.

Overnight in Asia, Australia’s central [bank raised its key rate](https://www.financedigest.com/ecbs-villeroy-rate-hike-signals-strong-confidence-in-european-banks.html "ECB’s Villeroy: rate hike signals strong confidence in European banks") by a bigger-than-expected 25 basis points, lifting the Aussie dollar as much as 1.3% and hitting local shares.

The [Bank of England is expected to raise rates](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") on Thursday for the fourth time in a row.

Asian equities on Tuesday were mostly steady in holiday-thinned trade, with both [Chinese and Japanese markets](https://www.financedigest.com/uk-property-market-braced-for-influx-of-chinese-buyers-as-golden-week-approaches.html "UK property market braced for influx of Chinese buyers as Golden Week approaches") shut. But in [Hong Kong](https://www.financedigest.com/screening-of-winnie-the-pooh-horror-film-cancelled-in-hong-kong.html "Screening of ‘Winnie the Pooh’ horror film cancelled in Hong Kong"), Alibaba shares fell as much as 9% on worries over the status of its billionaire founder Jack Ma.

A state media [report that Chinese authorities took action against a person surnamed Ma hit the stock](https://www.financedigest.com/influx-of-one-time-investors-swapping-stocks-for-bricks-and-mortar-reports-agency.html "Influx of ‘one-time’ investors swapping stocks for bricks and mortar reports agency") hard, but it recouped losses after the report was revised to make clear it was not the company’s founder.

Germany’s benchmark 10-year [Bund yield](https://www.financedigest.com/euro-zone-bond-yields-rise-after-u-s-jobs-data.html) rose to 1% for the first time since 2015, before retreating as caution set in ahead of the anticipated U.S. and UK [rate hikes](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") this week.

The [yield on 10-year Treasury](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") notes fell 1.5 basis points to 2.981%, after breaching the key milestone of 3% for the first time since December 2018 on Monday.

The dollar fell against a basket of major currencies as investors weighed how much of the Fed’s expected move to [hike rates](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets") this week and beyond was already priced in.

The dollar, which has been supported by safe haven buying on worries over the [economic outlook](https://www.financedigest.com/analysis-russians-feel-little-economic-pain-now-long-term-outlook-darkens.html "Analysis: Russians feel little economic pain now, long-term outlook darkens"), stayed just below the nearly two-decade high reached in April and the euro steadied above the lowest level in more five than years hit last month.

The dollar index fell 0.106%, while the euro rose 0.17% to $1.0522. The Japanese yen was [little changed at 130.16 per dollar](https://www.financedigest.com/stocks-dollar-little-changed-as-inflation-data-sends-mixed-signals.html "Stocks, dollar little changed as inflation data sends mixed signals").

Oil slipped as concerns about demand due to [China’s](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") prolonged COVID lockdowns outweighed support from a possible European oil embargo on Russia over the war in Ukraine.

U.S. crude futures settled down $2.76 at $102.41 a barrel, while Brent fell $2.61 to settle at $104.97 a barrel.

Copper and aluminium prices fell sharply as weak manufacturing data on Monday, COVID-19 outbreaks in China and [rising rates](https://www.financedigest.com/uk-inflation-rate-unexpectedly-rises-to-10-4-in-february.html "UK inflation rate unexpectedly rises to 10.4% in February") stoked fears that demand for metals will soften.

Gold firmed, tracking a slight retreat in Treasury yields and the dollar, while investors eyed an aggressive [rate hike by the Fed](https://www.financedigest.com/dollar-hits-one-month-high-against-yen-as-traders-bet-on-fed-rate-hike.html "Dollar hits one-month high against yen as traders bet on Fed rate hike") on Wednesday.

U.S. gold futures settled up 0.4% at $1,870.60 per ounce.

Bitcoin fell 2.56% to $37,535.85.

(Reporting by Herbert Lash, additional eporting by Danilo Masoni in Milan; Editing by Alexander Smith, Bernadette Baum and David Gregorio)


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