Global stocks gain ahead of Fed, oil eyes Russia-Ukraine Reuters

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, January 25, 2022. REUTERS/Staff

LONDON, Jan 26 (Reuters) – Global stocks edged higher and the dollar was flat ahead of the outcome of the Federal Reserve’s policy meeting on Wednesday, as oil hit a seven-year high on tensions. between Russia and Ukraine.

The Fed is due to update its policy plan at 7:00 p.m. GMT after a two-day meeting. A first rise in rates is observed in March and the markets are already anticipating three additional increases of a quarter of a point by the end of the year.

The MSCI World Index (.MIWD00000PUS) rose 0.32%. US equities were more upbeat, however, with US S&P futures up 1.01% after the index (.SPX) lost 1.22% in the previous session.

European stocks (.STOXX) climbed 1.47% and Britain’s FTSE 100 (.FTSE) gained 1.38%.

US stocks posted their worst week since 2020 last week, and the MSCI index (.MIWD00000PUS) is on track for its biggest monthly decline since the COVID-19 pandemic hit markets in March 2020. although Goldman Sachs analysts said the shares did not reach “danger zone levels”. Read more

Sébastien Galy, senior macro strategist at Nordea Asset Management, said that given the recent volatility, he expected the Fed to be “much more cautious about the timing and pace of balance sheet reduction and that this will be well received by the equity market”.

Growing tension as Russian troops massed on the Ukrainian border added to a risk-averse environment for investors. Read more

US President Joe Biden said on Tuesday he would consider personal sanctions against President Vladimir Putin if Russia invades Ukraine, as Western leaders step up military preparations and draw up plans to protect Europe from a possible energy shock. Read more

U.S. crude rose 0.27% to $85.82 a barrel after hovering around $88 last week. Brent crude rose 0.44% to $88.57 a barrel.

The dollar index was flat at 96.08 against a basket of major currencies, and the euro at $1.1286, near one-month lows set on Tuesday.

The Canadian dollar strengthened about 0.4% to 1.25905 against the dollar. The odds are mixed on whether or not the Bank of Canada will raise rates for the first time since 2018 on Wednesday, with Omicron likely to delay the start of an aggressive tightening campaign aimed at tackling inflation.

US Treasury yields on two-year bills rose slightly to 1.0433%, holding on to gains made earlier this month. The yield on the benchmark 10-year Treasuries was 1.7851%, slightly below the two-year high of 1.9% hit last week.

Yields on 10-year German government bonds rose slightly to -0.069% .

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) was unchanged, following steep losses earlier in the week that left the index down 2.8% this year. It is testing the 1-year low from mid-December.

The Japanese Nikkei (.N225) traded down 0.44%, near its lowest level since December 2020.

China’s blue-chip index (.CSI300) hit its lowest level since October 2020 before reversing to close 0.72% higher. The Hong Kong Hang Seng Index (.HSI) rose 0.12%.

Hao Hong, head of research at BOCOM International, expects investors will have limited appetite to hold large positions in Asia after strong market selling ahead of the Lunar New Year holiday.

Gold prices fell to $1,844 an ounce after hitting a 10-week high in the previous session.

Additional reporting by Stella Qiu in Beijing and Alun John in Hong Kong; Editing by Lincoln Feast and Kim Coghill

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