Global Shares Inch Up Ahead of Federal Reserve Meeting Minutes

Global shares inched up on Monday as a U.S. holiday tempered volatility ahead of minutes of the latest Federal Reserve meeting even though data on core inflation has raised the risk of interest rates heading higher for longer.

The dollar, which is this month on track for its largest one-month rise since September, eased a touch, reflecting a retreat in risk aversion among investors.

With U.S. markets shut for the Presidents’ Day holiday, non-U.S. assets got some respite from the relentless pressure of last week. The MSCI All-World index rose 0.2%, helped by modest gains in Europe, where the STOXX 600 rose 0.1%, as gains in mining shares offset a decline in the tech sector.

A surge higher in both stock and bond prices in the first six weeks of the year came to a screeching halt, after a flurry of U.S. data suggested the world’s largest economy is holding up far better than expected, which means interest rates will have to rise further and take far longer to decline.

Related Facts

• The dollar is on track for its largest one-month rise since September.
• MSCI All-World index rose 0.2%.
• STOXX 600 rose 0.1%.
• U.S. data suggests the world’s largest economy is holding up far better than expected.
• Money markets show investors expect U.S. rates to peak at around 5.3% by July.

Key Takeaway

Investors are starting to accept they may have been overly optimistic in their assumptions that U.S. interest rates will not have to rise further and take far longer to decline. Money markets show investors expect U.S. rates to peak at around 5.3% by July.

Conclusion

Global shares inched up on Monday as investors brace for the minutes of the latest Federal Reserve meeting. The U.S. data suggests the world’s largest economy is holding up far better than expected, which means interest rates will have to rise further and take far longer to decline. Money markets show investors expect U.S. rates to peak at around 5.3% by July.