The Dow Jones Industrial Average was 0.9% lower in early deals while the S&P 500 fell 1.2%. The Nasdaq Composite also fell 1.4%. — Karen Gilchrist
Bank of England raises key interest rate by 75 basis points, biggest increase in 33 years
Buses drive through the City of London financial district outside the Royal Exchange near the Bank of England on July 2, 2021 in London, United Kingdom. Mike Kemp | In pictures | Getty Images The Bank of England on Thursday raised interest rates by 75 basis points, the biggest single increase since 1989, but struck a dovish tone as policymakers tried to temper market expectations of further aggressive monetary tightening. The 75 basis point increase takes the Bank Rate to 3%, for its eighth consecutive hike in the key lending rate, after the Monetary Policy Committee voted 7-2. One member voted for a 0.5 percentage point increase while one preferred a 0.25 increase. “The majority of the Committee considers that, if the economy develops broadly in line with the latest Monetary Policy Report forecasts, further increases in the Bank Rate may be required for a sustainable return of inflation to target, albeit at a peak below price in financial markets,” the MPC said, offering uncharacteristically specific market guidance. Read the full story here. – Elliott Smith
The ECB’s Centeno says most rate hikes have already taken place
European Central Bank policymaker Mario Centeno told Portuguese newspaper Publico on Thursday that a large part of the eurozone’s interest rate hikes have already taken place. The ECB has raised interest rates by a combined 200 basis points in its last three monetary policy meetings as it tries to rein in record inflation, which is expected to peak in the fourth quarter. – Elliott Smith
Stocks in motion: Netcompany up 16%, RS Group down 10%
Netcompany shares jumped more than 16% in early trading to lead the Stoxx 600 after the Danish IT consultancy reported strong third-quarter earnings. At the bottom of Europe’s blue chip index, shares in British industrial distributor RS Group fell 10% after the company’s half-yearly report and the announcement that its chief executive will take a leave of absence.
The crisis is over for the British pound, but analysts see further weakness ahead
The British pound is on a firmer footing since the appointment of new prime minister Rishi Sunak, but Wall Street still sees further vulnerability over the next 12 months. In a note on Monday, Deutsche Bank vice president and FX strategist Shreyas Gopal said the “crisis” chapter for the UK could now close, with the pound now likely to trade as a “normal” currency, but noted that downward pressure from large external financing needs and low real interest rates. Read the full story here. – Elliott Smith
Refinitiv data shows 2-year US Treasury yield briefly above 5.1%
Refinitiv data showed the yield on the US 2-year note briefly topped 5.1% in afternoon Asian trading. It was last set at 4.6804%. The cause of the spike was not immediately clear. The yield on the 10-year Treasury rose during US hours after Fed Chairman Jerome Powell said the terminal rate would be even higher than expected – and the latter stood at 4.1448%. The yield on the 30-year Treasury note was also higher at 4.1908%. Yields move inversely to prices and 1 basis point equals 0.01%. – Jihye Li
Investors should remain cautious on unverified notes on China’s opening: Credit Suisse
Investors should “remain cautious” about unverified notes circulating on social media hinting that China will reopen early next year, a Credit Suisse strategist said. “I think judging from different angles with multiple news feeds – especially unverified ones, we need to remain cautious,” said Edmond Huang, Credit Suisse’s head of equities research in China. Speaking at the company’s investment conference in China, Huang said it was more likely to be a measured reopening process than an abrupt one. “It will take some time especially after the party congress and the formation of the new government – which means it will be a more gradual process than overnight, with China fully opening up to the rest of the world again,” he said. — Jihye Li
JPMorgan Asset Management sees a smaller Fed hike in December
JPMorgan Asset Management expects the Federal Reserve to raise interest rates by as little as 50 basis points in December, according to a note. APAC chief market strategist Tai Hui said the Fed could take a more dovish path in the near term. “If core inflation eases between now and the end of the year, the Fed could choose a more modest rate path and avoid tipping the economy into recession,” it said in the note. “We think there is some easing of inflation on the horizon,” he said, adding that the Fed’s tightening cycle is expected to extend through the second quarter of 2023. – Jihye Li
CNBC Pro: Wall Street cuts price targets this earnings season. Here are 13 US stocks that bucked the trend
Only a handful of companies have avoided having their stock price targets cut by Wall Street banks this earnings season, a CNBC Pro analysis revealed. Of the nearly 300 S&P 500 companies that reported results last month, more than two-thirds – 72% – saw analysts’ average price targets cut or unchanged from the previous month. Only 13 stocks have emerged with a significantly higher price target of 5% or more and still offer a potential upside of at least 5%. CNBC Pro subscribers can read more here. — Ganesh Rao
Stocks fall as Powell says final rate will be higher than expected
In a briefing with reporters on Wednesday after the fourth straight rate hike of 0.75 percentage points, Federal Reserve Chairman Jerome Powell said the central bank’s ultimate target for rate hikes has been raised. “We still have a ways to go and the incoming data from our last meeting suggests that the final level of interest rates will be higher than previously expected,” he said. Stocks slid after the comment, which signals interest rates will continue to move higher and likely stay higher than expected for longer as the Fed tames inflation. That reversed gains from earlier in the afternoon, when traders took the Fed’s statement as more dovish and hoped that rate hikes would be smaller going forward. The Dow Jones industrial average rose about 60 points, but retreated. The S&P 500 also gave back a post-rate-hike rally and was up just 0.09%. The Nasdaq was slightly in the red. —Carmen Reinick Wed, Nov 2, 202212:45 am EDT
European markets: Here are the opening invitations
European markets are eyeing a positive start to trading on Wednesday as investors brace for the latest monetary policy decision from the US Federal Reserve. Many analysts expect the meeting to lead to a rate hike of 75 basis points. Investors will also be watching the central bank’s statement and Fed Chairman Jerome Powell’s press conference for signs of a slowdown in the pace of tightening. London’s FTSE is expected to open 21 points higher at 7,115, Germany’s DAX 84 points at 13,422, France’s CAC 36 points at 6,364 and Italy’s FTSE MIB up 119 points at 22,771, according to IG data. Profits will come from Next, Aston Martin Lagonda, GSK, Metro and Maersk. German unemployment data for October will also be released. — Holly Elliott
