US futures advance ahead of Fed open policy meeting

Wall Street posted a rise in pre-market trading ahead of this week’s Federal Reserve policy meeting, with most economists expecting the sixth hike this year in the central bank’s main borrowing rate.

S&P 500 futures rose 0.9% on Tuesday and Dow futures rose 0.6%.

Stubborn inflation, the likes of which has not been seen in the United States since the early 1980s, prompted the Fed to rapidly raise its main benchmark borrowing rate in an effort to cool the economy. Analysts wait for the fed to announce at the end of its meeting on Wednesday that it has further raised its rate by three quarters of a point. It would be the central bank’s fourth consecutive 0.75 percentage point increase.

The Fed has already raised its short-term policy rate by 3 percentage points since March, the fastest rate of increase since the early 1980s. The increases are aimed at raising borrowing costs for mortgages, loans automobiles and business loans and curb inflation by slowing the economy.

While investors mostly expect rate hikes to continue through the end of this year, there has been some hope that the Fed will ease somewhat after the government announced that the economy American contracted in the first half. However, the United States back to growth over the past quarter and generally healthy corporate earnings reports, sparked a wave of buying on Wall Street in October.

More than half of S&P 500 companies reported results and posted overall earnings growth of 2.3%, according to FactSet.

U.S. markets ended lower on Monday, but major indexes still posted big gains for October, including the best month for the Dow Jones Industrial Average since 1976. The broader S&P 500, the benchmark for many funds indices, posted its first monthly gain since July, as did the Nasdaq composite.

In Asia overnight, Hong Kong jumped more than 5% and other global markets also rose after a Chinese industry survey showed activity improved.

The monthly manufacturing gauge from Caixin, a Chinese business news magazine, has helped counter renewed concerns about coronavirus outbreaks. It showed that activity declined in October, but at a slower pace than the previous month.

The Hang Seng index in Hong Kong jumped 5.2% to 15,455.27 after a comment circulated on social media saying, without citing any sources, that the ruling Communist Party may set up a “reopening committee to examine ways to reduce virus checks that have disrupted trade and business.

A Foreign Ministry spokesman, Zhao Lijian, told reporters he was “not aware of what you just mentioned” when asked about the rumour.

In other Asian exchanges, the Nikkei 225 in Tokyo added 0.3% to 27,678.92, while the Kospi in Seoul jumped 1.8% to 2,335.22. Sydney’s S&P-ASX 200 gained 1.6% to 6,976.90. India Sensex advanced 0.4%. The Shanghai Composite Index gained 2% to 2,940.75.

In midday European trading, the German DAX gained 1.3% and in Paris, the CAC40 jumped 1.8%. Britain’s FTSE 100 jumped 1.6%.

The European Union’s statistical agency, Eurostat, announced on Monday that inflation hit 10.7% in October, another record high in the 19 countries that use the euro currency, fueled by high natural gas and electricity prices due to Russia’s war against Ukraine.

Investors are also awaiting the US government’s monthly jobs report on Friday to see if the hot job market is cooling as inflation weighs on businesses. So far this year, the labor market has remained tight, with unemployment around a 50-year low at 3.5% and businesses creating jobs at a brisk pace.

Wall Street still has plenty of earnings to review from big companies this week. Pfizer shares rose 3% after announcing sales and earnings above Wall Street targets. CVS reports Wednesday and Starbucks releases results Thursday.

Abiomed shares jumped more than 50% in premarket after Johnson & Johnson announced it would spend $16.6 billion to buy the cardiovascular technology company.

In energy markets, benchmark U.S. crude oil gained $1.24 to $87.77 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for international oil pricing, added $1.31 to $94.12 a barrel in London.

The dollar fell to 147.26 yen from 148.73 yen on Monday. The euro fell from 98.82 to 99.32 cents.

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AP Business Writer Joe McDonald in Beijing contributed. Kurtenbach reported from Bangkok; Ott reported from Washington.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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