An advance in Chinese equity markets set a modestly positive tone for world stocks yesterday, despite continued trade tensions with the United States, as investors awaited an expected interest rate increase by the US Federal Reserve.
The US dollar rose to a one-week high in anticipation of the hike, which would be the eighth since late 2015, while health stocks lifted Wall Street.
The Dow Jones Industrial Average rose 51.45 points, or 0.19 per cent, to 26,543.66, the S&P 500 gained 6.7 points, or 0.23 per cent, to 2,922.26 and the Nasdaq Composite added 25.85 points, or 0.32 per cent, to 8,033.32.
Further gains in the US market may be limited in the short term, however, some analysts said.
Chinese shares rose after global index provider MSCI said it could quadruple China’s weighting in global benchmarks. That lent fresh impetus to a market already buoyed by expectations of state stimulus to offset the impact of US tariffs.
Yesterday, the Shanghai-listed shares closed almost 1 per cent higher at eight-week highs and the Hang Seng Index, made up of large Hong Kong companies, rose 1.15 per cent.
The pan-European FTSE-urofirst 300 index rose 0.20 per cent and MSCI’s gauge of stocks across the globe gained 0.17 per cent.
Fed funds rate futures implied that traders are fully pricing in a US rate hike, plus an 85 per cent chance of another rise in December.
That expectation was cemented after data showed US consumer confidence hit an 18-year high. The Fed’s policymakers were due to wind up a two-day rate-setting meeting later in the evening.
Oil prices eased off four-year highs above $82 hit on Tuesday but were still set for a fifth consecutive monthly quarter of gains, driven by a looming drop in Iranian exports in the last quarter of the year when global demand heats up.
United States crude fell 0.65 per cent to $71.81 per barrel and Brent was last at $80.89, down 0.46 per cent.
Gold prices slipped and copper fell for a third straight session on the expected Fed rate hike and the firmer dollar.
Spot gold dropped 0.6 per cent to $1,194.11 an ounce. Copper lost 0.46 per cent to $6,289.00 a tonne.