By Chuck Mikolajczak
NEW YORK (Reuters) -Global shares edged higher to a fresh intraday record on Tuesday, continuing a recent rally fueled by the appearance of cooling trade tensions between the U.S. and China, while investors awaited policy announcements from multiple central banks and digested the latest round of corporate earnings.
The U.S. Federal Reserve will kick off on Wednesday a string of policy announcements from global central banks, including those of Japan, Canada, and Europe, this week.
The Fed is widely expected to cut interest rates at the meeting, with markets pricing in a 96.7% chance for a rate cut of 25 basis points, according to CME’s FedWatch Tool.
Expectations for a lower path of interest rates from the central bank along with recent signs trade tensions between the U.S. and China were easing have helped boost risk appetite, sending stocks higher and keeping the 10-year U.S. Treasury yield moored near multi-month lows.
In addition, the ongoing U.S. government shutdown has led to a dearth of economic data for investors to parse.
‘CONTINUED RALLY’ SEEN IN RISKY ASSETS
However, the ADP National Employment Report’s inaugural weekly preliminary estimate showed on Tuesday that U.S. private payrolls increased by an average 14,250 jobs in the four weeks ending October 11.
“Volatility has been extraordinarily low and kind of, in some respects, surprising given all of the uncertainties… but it seems to be very, very stable, and you’re seeing the sort of continued rally in risky assets,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.
“So you have a combination, especially for the Fed meeting, of lower yields, easier financial conditions, inflation coming off, the job market remaining somewhat stable as well, so it’s been a tough read on the economy.”
The European Central Bank (ECB) and Bank of Japan (BOJ) are largely expected to keep rates unchanged at their respective policy meetings.
DOW LEADS GAINS AMONG MAJOR INDEXES
On Wall Street, U.S. stocks rose modestly in early trading, with the Dow leading gains among major indexes due to a surge of about 4% in Sherwin-Williams after the paint and coatings company reported quarterly earnings that topped expectations.
The Dow Jones Industrial Average rose 281.40 points, or 0.59%, to 47,826.92, the S&P 500 rose 6.05 points, or 0.09%, to 6,881.21 and the Nasdaq Composite rose 50.84 points, or 0.22%, to 23,688.29.
Equities have been rallying as U.S. President Donald Trump and his Chinese counterpart Xi Jinping are due to meet on Thursday to decide on a framework that could pause tougher U.S. tariffs and China’s rare-earth export curbs, easing market jitters around a trade war.
Earnings are expected this week from “Magnificent Seven” heavyweights Microsoft, Alphabet, Apple, Amazon and Meta Platforms, and investors will closely eye the results to see if they justify heightened valuations.
MORE THAN FOUR IN FIVE S&P COMPANIES BEAT EXPECTATIONS
Of the 180 S&P 500 companies that have reported earnings through Tuesday morning, 86.7% have topped analyst expectations, according to LSEG data.
MSCI’s gauge of stocks across the globe rose 0.40 points, or 0.04%, to 1,012.88 after hitting an intraday record of 1013.60 while Europe’s broad FTSEurofirst 300 index fell 3.19 points, or 0.14%.
The yield on benchmark U.S. 10-year notes fell 0.4 basis point to 3.993%, from 3.997% late on Monday. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.3 basis point to 3.498%.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.08% to 98.69, with the euro up 0.14% at $1.1659.
Against the Japanese yen, the dollar weakened 0.58% to 151.99 after comments from a Japanese minister and U.S. Treasury Secretary Scott Bessent eased some concerns about more expansive fiscal and monetary policy in the country.
Sterling weakened 0.49% to $1.3268.
In commodities, U.S. crude fell 1.6% to $60.33 a barrel and Brent fell to $64.56 per barrel, down 1.6% on the day in a third session of declines as investors assess the effect of U.S. sanctions on Russia’s two biggest oil companies along with a potential OPEC+ plan to raise output.
(Reporting by Chuck Mikolajczak; Additional reporting by Samuel Indyk in London and Wayne Cole in Sydney; Editing by Joe Bavier and Bernadette Baum)
