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World shares reached a three-week high as recession worries subsided

Image: Reuters Berita 24 English -  The dollar stayed at two-week lows on decreased expectations for a rate hike in the United States, but g...

Image: Reuters

Berita 24 English -  The dollar stayed at two-week lows on decreased expectations for a rate hike in the United States, but global shares reached a three-week high on Wednesday as solid U.S. corporate profits and the anticipated restart of Russian gas supply to Europe allayed concerns about a recession.

According to sources speaking to Reuters this week, Russian gas flows through the Nord Stream 1 pipeline are expected to resume on schedule on Thursday following the completion of scheduled maintenance, assuaging investors' concerns about the gas supply to Europe as part of tat-for-tat responses to the conflict in Ukraine.

The U.S. Federal Reserve is expected to raise interest rates significantly by 75 basis points next week in order to cool the nation's raging inflation. However, this is a setback compared to earlier predictions of 100 bps.

On the other hand, according to Reuters, policymakers at the European Central Bank are considering boosting interest rates on Thursday by a larger-than-expected 50 basis points.

According to Pictet Asset Management's senior strategist, Luca Paolini, "at the edges there is some good news like Nord Stream."

Overall, the market shouldn't have rallied that much, but it has because of inflation predictions.

S&P 500 futures and Nasdaq futures both increased by more than 0.4 percent on better-than-expected overnight reports from American businesses including Netflix Inc.

The tech-heavy Nasdaq Composite increased 3.1 percent on Tuesday, while the S&P 500 rose 2.8 percent.

After increasing by 2% on Tuesday, the MSCI world stock index (.MI WD00000PUS) increased by 0.36 percent.

European equities were stable, and despite data showing UK inflation reaching a fresh 40-year high, the FTSE 100 in Britain increased by 0.54 percent, helped by gains in oil and mining firms.

After posting its largest one-day percentage rise in a month the day before on mounting rate hike bets, the euro increased 0.14 percent to $1.0236 today.

In relation to a currency index, the dollar remained stable at 106.67, not far from the two-week lows reached the previous day.

"Although we believe it is still too early to abandon a defensive posture, another bounce in risk assets is very likely. The dollar is projected to continue to advance until 3Q22." Sim Moh Siong, a senior currency strategist at the Bank of Singapore, stated.

In Asia, the most comprehensive index of Asia-Pacific equities outside of Japan, MSCI, increased by 1%, led by a 1.65% increase in Australia's resource-dependent stocks and a 1.40% increase in Hong Kong stocks. Nikkei in Japan increased by 2.67 percent.

As the central bank maintained its benchmark lending rates in the midst of a weak economic rebound from COVID lockdowns, Chinese shares increased by 0.34 percent, trailing gains in other markets.

On Thursday, the Bank of Japan also announces its monetary policy, but no adjustments to its ultra-easy stance are anticipated.

The two-year yield last was at 3.1979 percent, down from the previous closing of 3.2310 percent, and the closely monitored portion of the U.S. yield curve remained inverted.

The yield on the benchmark 10-year Treasury note was 2.9874 percent, down from its finish on Tuesday of 3.019 percent.

German 10-year bond yields decreased 4 basis points to 1.25%.

In response to attempts by central banks around the world to contain inflation and in advance of anticipated increases in U.S. crude stocks as product demand declines, oil prices fell by more than $1 per barrel.

While Brent crude declined 1.5% to $105.73 per barrel, U.S. crude sank 1.75 percent to $102.40 per barrel.

Gold's spot price fell 0.2 percent to $1,708 per ounce.

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