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Global stocks, oil prices higher before likely US rate hike

Global stocks, oil prices higher before likely US rate hike

The dollar rose to 136,90 yen from Tuesday's 136.00 yen. The euro gained to $1.0138 from $1.0120.

Global stocks, oil prices higher before likely US rate hike  (Photo: Reuters) Global stocks, oil prices higher before likely US rate hike (Photo: Reuters)

Major global stock markets and Wall Street futures advanced on Wednesday as traders prepared for a possible sharp interest rate hike by the Federal Reserve to cool surging inflation.

London and Frankfurt opened higher. Tokyo and Sydney gained while Shanghai declined. Oil prices rose.

The Fed on Wednesday is expected to announce an increase of up to three-quarters of a percentage point in its benchmark interest rate, triple its usual margin.

Investors worry such aggressive action by the Fed and other central banks in Europe and Asia to control inflation that is at multi-decade highs might derail global economic growth.

“The main risk at this stage is in fact an inflation overkill' with monetary tightening too abrupt, unnecessarily pushing up the unemployment rate,” Thomas Costerg of Pictet Wealth Management said in a report.

Costerg said most economic indicators and lower commodity prices already point to slower inflation ahead.

In early trading, the FTSE 100 in London rose 0.5 per cent to 7,345.81.

The DAX in Frankfurt rose 0.3 per cent to 13,136.88 and the CAC 40 in Paris advanced 0.3 per cent to 6,230.48.

The future for Wall Street's benchmark S and P 500 index was up 0.9 per cent and that for the Dow Jones Industrial Average added 0.4 per cent.

On Tuesday, the S and P 500 fell 1.2 per cent after Walmart warned inflation that has spiked to a four-decade high of 9.1 per cent hurts American consumer spending.

The Dow dropped 0.7 per cent and the Nasdaq composite closed 1.9 per cent lower.

In Asia, the Shanghai Composite Index lost less than 0.1 per cent to 3,275.76 while Tokyo's Nikkei 225 advanced 0.2 per cent to 27,715.75. The Hang Seng in Hong Kong sank 1.4 per cent to 20,620.10.

Sydney's S and P-ASX 200 added 0.2 per cent to 6,823.20 after data showed Australian inflation rose to 6.1 per cent in the latest quarter from 5.1 per cent but the increase was smaller than forecast.

The Kospi in Seoul gained 0.1 per cent to 2,415.53 and India's Sensex rose 0.8 per cent to 55,715.95. New Zealand declined while Southeast Asian markets advanced.

On Wall Street, other major retailers also fell on Tuesday following Walmart's profit warning. Target dropped 3.6 per cent, Macy's slid 7.2 per cent and Kohl's fell 9.1 per cent.

Tech stocks retreated. Microsoft fell 2.7 per cent, Amazon slid 5.2 per cent and Facebook owner Meta Platforms dropped 4.5 per cent.

General Motors fell 3.4 per cent after its second-quarter profit fell 40 per cent from a year ago.

US sales fell 15 per cent after shortages of processor chips and other components left the company unable to deliver 95,000 vehicles during the quarter.

In energy markets, benchmark US crude rose USD 1.17 to USD 96.15 per barrel in electronic trading on the New York Mercantile Exchange.

The contract fell USD 1.72 on Tuesday to USD 94.98. Brent crude, the price basis for international oils, added 94 cents to USD 100.40 per barrel in London.

The dollar rose to 136,90 yen from Tuesday's 136.00 yen. The euro gained to USD 1.0138 from USD 1.0120.

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