Stocks slip as market seeks rate-cut timing, dollar gains -November 08, 2023 at 03:48 pm EST

(Adds comment in paragraphs 4-5, oil and gold settlement
prices, updates prices at 3:18 p.m. ET)

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

NEW YORK/LONDON, Nov 8 (Reuters) – World stock markets
slid on Wednesday and the dollar gained for a third straight day
as some investors accepted the notion that while the Federal
Reserve may have halted hiking interest rates, they will still
stay higher for longer.

Yields across the Treasury curve mostly fell as the auction
of benchmark 10-year notes was modestly better than expected and
the view that the Fed has likely ended its hiking cycle kept
downward momentum in place.

The dollar also has rebounded from last week’s sharp selloff
amid rising confidence the Fed has ended raising rates, though
there is less agreement on whether a rate cut is on the horizon
with inflation still above the U.S. central bank’s 2% target.

“The Fed not necessarily hiking anymore might get people a
little bit more excited, but does that mean that we’re going to
start cutting aggressively? It’s too early to say that,” said
Marvin Loh, senior global macro strategist at State Street in
Boston.

“A lot of the questions that we were asking that drove
yields higher we’re still asking,” he said, referring to the
bond rally that raised the 10-year yield above 5% two weeks ago.
Bond prices move inversely to their yield.

Fed Chair Jerome Powell did not comment on monetary policy
or the economic outlook in prepared remarks at a U.S. central
bank statistic conference. Investors have ramped up bets for Fed
rate cuts next year, though when has not been resolved.

Markets are pricing in an almost 50% chance of a rate cut of
at least 25 basis points as soon as May, according to the CME
Group’s FedWatch Tool, compared with about 41% a week earlier.

But futures also call for the Fed’s overnight lending rate
to remain above 5% through next June.

MSCI’s all-country world stock index shed
0.07% after last week posting its biggest weekly jump in almost
a year. Europe’s broad STOXX 600 index closed up 0.28%.

On Wall Street, the Dow Jones Industrial Average fell
0.19%, the S&P 500 gained 0.01% and the Nasdaq Composite
dropped 0.07%.

“The market has it right that rates have peaked,” said Rhys
Williams, chief strategist at Sprouting Rock Asset Management in
Bryn Mawr, Pennsylvania, but since the Fed has “been so macho
about higher for longer,” a rate cut is unlikely to come soon.

European shares rose, supported by gains in healthcare
stocks and strong earnings reports, while investors assessed a
slew of economic data and comments from central bankers for cues
on the European Central Bank’s rate hike path.

Data showed euro zone retail sales fell roughly in line with
expectations in September, while another survey showed euro zone
consumers have raised their inflation expectations over the next
12 months to 4%.

The dollar index rose 0.03% at 105.55, with the euro
up 0.04% to $1.0703.

Still, it remains well off the high at the start of this
month at 107.11.

The majority of FX strategists in a Reuters poll expect
dollar weakness to linger for the rest of the year, amid a
building consensus that the Fed’s tightening cycle is done, also
signaling a peak in U.S. yields.

MSCI’s broadest index of Asia-Pacific shares
overnight slipped 0.3% and Japan’s Nikkei 225 closed
lower after Bank of Japan Governor Kazuo Ueda told parliament
the central bank does not need to wait until real wages turn
positive before exiting stimulus.

Hong Kong’s Hang Seng fell and an index of mainland blue
chips lost 0.24%.

Chinese authorities have asked Ping An Insurance Group
to take a controlling stake in embattled Country
Garden, the nation’s biggest private property
developer, four people familiar with the plan said.

A spokesperson for Ping An said the company had
not been approached by the government and denied the information
reported by Reuters.

Oil prices slid to more than three-month lows on concern
over waning U.S. and Chinese demand, while gold prices retreated
for a third straight session as yields on the short end of
Treasuries rose and on longer-dated notes fell.

Brent crude futures settled down $2.07 to $79.54 a
barrel and U.S. crude lost $2.04 to settle at $75.33.

The two-year Treasury yield, which reflects
interest rate expectations, rose 1.4 basis points to 4.932%,
while the yield on the benchmark 10-year note was
down 5.6 basis points at 4.515%.

U.S. gold futures settled 0.8% lower at $1,957.80 an
ounce.

(Reporting by Herbert Lash, additional reporting by Dhara
Ranasinghe and Alun John in London, Kevin Buckland in Tokyo;
Editing by Mark Potter, Chizu Nomiyama and Marguerita Choy)