GLOBAL MARKETS – Actions Taken in Focus of Central Bank Results and Meetings


* Global stock prices hit a record high

* Result of the ECB meeting expected at 11:45 GMT

* Crude oil prices drop 1%

* The yield curve flattens sharply as short rates rise

* United States advances in third quarter growth affected by COVID

By Huw Jones

LONDON, Oct. 28 (Reuters) – Global equities traded in narrow ranges on Thursday close to recent highs, as investors digested a mixed earnings stream ahead of major central bank meetings.

The MSCI All World Stock Index was little changed at 741 points, barely below its lifetime high of 749.16 points reached last month. In Europe, the STOXX index of 600 companies also remained stable at 474 points, around two points below its August record.

Markets were awaiting the European Central Bank meeting later in the morning.

“Markets are caught in a no man’s land of optimism that earnings will continue to be positive, versus pessimism that inflation will squeeze profit margins,” said Michael Hewson, chief market analyst at CMC Markets.

“Even though there is no proof of this, we have to end these central bank meetings because they keep investors on their toes,” Hewson said.

The impact of bottlenecks on sectors like autos was further highlighted by Volkswagen on Thursday, as its shares fell 2.4% after the German auto giant slashed its outlook for deliveries, a shortage of computer chips resulting in lower than expected operating profit in the third quarter. .

In Asia, Japanese robot maker Fanuc fell 7.8% while computer conglomerate Fujitsu fell 8.4% as its revenue showed a bigger-than-expected impact of a global chip shortage.

Oil prices hit their lowest level in two weeks after official figures showed a surprise jump in U.S. crude inventories, while COVID-19 cases spike in Europe, Russia and some outbreaks in China have shaken the hopes of a world? economic recovery.

Brent fell 1% to $ 83.78 a barrel, following its seven-year high of $ 86.70 on Monday. U.S. crude hit $ 81.80 a barrel, down 1% and after a seven-year high of $ 85.41 reached on Monday.

Investors will look at leading figures for economic growth in the United States in the third quarter ahead of Wall Street opening for clues to the pace of recovery in the world’s largest economy after a surge in COVID infections -19.

Overnight on Wall Street, the S&P 500 lost 0.51% from an all-time high of 4,574.79 touched on Tuesday, as the Nasdaq closed the session without much change.

The ECB should keep its policy unchanged and push back rising expectations of an interest rate hike next year, although it can admit that inflation will be higher than expected.

The euro was stable at $ 1.1612 before the ECB’s policy announcement later today.

ASIA eases flea worries

Japan’s Nikkei fell 0.9% while mainland Chinese stocks slipped 0.7%.

The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.3% on concerns about the impact of chip shortages.

“The working assumption in the market was that the impact of a chip shortage will wear off by the end of the year. But if this remains a problem next year, investors will surely be less confident. as for the outlook, “said Masayuki Murata, Managing Director. balanced portfolio investment at Sumitomo Life Insurance.

The Bank of Canada ended its quantitative easing earlier than expected and signaled on Wednesday that it could raise interest rates sooner than expected, as early as April 2022.

Longer-term yields have fallen in part because a tightening of monetary policy is likely to bring inflation under control and could derail the economic recovery over time.

US 10-year bond yields fell to 1.559%, from a five-month high of 1.705% reached a week ago.

“Long-term yields fall on fears that tighter monetary policies will constrain the economy in the long run,” said Naokazu Koshimizu, senior rate strategist at Nomura Securities.

The yen reacted in a limited way to the Bank of Japan’s decision to hold its policy in abeyance and stood at 113.62 per dollar, slightly lower.

(Edited by Shri Navaratnam and Ana Nicolaci da Costa)


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