(Bloomberg) — Stocks rose and Treasuries edged higher ahead of the Federal Reserve interest-rate decision and the US government’s new borrowing plan. Japan’s markets endured another day of turbulence as authorities fired verbal warnings on the yen and stepped into the bond market.
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Europe’s Stoxx 600 index climbed as Next Plc led gains among retailers after increasing its profit guidance. GSK Plc rose as the UK drugmaker boosted its earnings forecast. Orsted A/S plunged 22% on news it’s taking impairment charges of $4 billion on abandoned US wind projects. The Asian equity benchmark advanced 1%, led by Japanese stocks. US futures slipped after gains in the previous session.
The Fed is expected to hold rates steady at a 22-year high for a second meeting, while leaving open the possibility of another hike as soon as December with economic growth staying resilient. The recent surge in US Treasury yields has contributed to a tightening of financial conditions, leading even hawkish Federal Open Market Committee members to indicate patience over further rate moves.
“The Nov. 1 FOMC meeting has little drama attached to it. Very little is priced in and we do not expect the Fed to surprise,” Steven Englander, head of global G-10 FX research and North America macro strategy at Standard Chartered Bank, wrote in a note. “The big question is how much of the yield increase at the long end of the curve reflects changed expectations on growth and how much can be viewed as restraining growth down the road.”
Bond dealers are expecting the Treasury to unveil another round of increases this week to its note and bond auctions, though a sizable minority forecast the department will slow the pace of growth to avoid jolting yields higher.
The yen strengthened from near its weakest level this year after Japan’s foreign exchange chief said he was on standby for intervention. Japanese bond futures pared their losses slightly after the BOJ announced unscheduled bond-purchase operations as the 10-year bond yield approached 1%.
Chinese equity benchmarks ended the day little changed, underperforming the broader region, after a private survey showed the country’s manufacturing activity contracted.
In other markets, oil edged higher after slumping in the first two days of the week, as a still-contained Israel-Hamas war shifted attention to global demand. Gold dropped for a third straight session.
Key events this week:
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UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
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US construction spending, ISM Manufacturing, job openings, light vehicle sales, Wednesday
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All Saints holiday in much of Europe, Wednesday
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Treasury quarterly refunding announcement, Wednesday
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Federal Reserve interest rate decision. Fed Chair Jerome Powell holds news conference, Wednesday
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Eurozone S&P Global Eurozone Manufacturing PMI, Thursday
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Bank of England interest rate decision. Governor Andrew Bailey holds news conference, Thursday
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US factory orders, initial jobless claims, productivity, Thursday
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Apple earnings, Thursday
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China Caixin services PMI, Friday
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Eurozone unemployment, Friday
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US unemployment, nonfarm payrolls, Friday
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Canada employment report, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.4% as of 8:24 a.m. London time
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S&P 500 futures fell 0.2%
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Nasdaq 100 futures fell 0.2%
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Futures on the Dow Jones Industrial Average fell 0.2%
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The MSCI Asia Pacific Index rose 1%
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The MSCI Emerging Markets Index was little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.2% to $1.0559
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The Japanese yen rose 0.3% to 151.29 per dollar
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The offshore yuan was little changed at 7.3386 per dollar
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The British pound was little changed at $1.2154
Cryptocurrencies
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Bitcoin fell 0.6% to $34,455.92
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Ether fell 0.4% to $1,807.5
Bonds
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The yield on 10-year Treasuries declined two basis points to 4.91%
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Germany’s 10-year yield advanced four basis points to 2.85%
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Britain’s 10-year yield advanced five basis points to 4.56%
Commodities
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Brent crude rose 0.7% to $85.59 a barrel
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Spot gold fell 0.3% to $1,977.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Yumi Teso and Tassia Sipahutar.
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