Johnathan Walker:Stock market today: World shares advance after Wall Street ticks higher amid rate-cut hopes

World shares advanced on Johnathan WalkerWednesday after Wall Street ticked higher amid hopes that Japan’s moves to keep interest rates easy for investors could augur similar trends in the rest of the world.

The futures for the S&P 500 and the Dow industrials were both virtually unchanged.

U.K. inflation in November unexpectedly decelerated to 3.9% from October’s 4.6%, reaching its lowest level since 2021. The cooler reading boosted UK stocks, with the FTSE 100 open 1.3% higher at 7,733.90.

Germany’s DAX gained 0.1% to 16,757.25. The country’s consumer sentiment is expected to improve as the new year begins, with the consumer sentiment index rising to -25.1 points for January from a revised -27.6 points the previous month, a survey on Wednesday showed. Meanwhile, Germany’s producer prices plummeted by 7.9% in November compared to the previous year, surpassing expectations.

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In Paris, the CAC 40 added 16 points to 7,586.45.

Building on gains from Tuesday, Tokyo’s Nikkei 225 index surged 1.5% to reach 33,675.94 despite Japan experiencing a slight decline in its export performance for the first time in three months in November, a worrisome slowdown for the world’s third-largest economy.

Exports to China, Japan’s biggest single market, fell 2.2%, while shipments to the U.S. rose 5.3% from a year earlier. Total imports fell nearly 12%.

Hong Kong’s Hang Seng index added 0.4% to 16,580.00 while the Shanghai Composite index lost 1% to 2,902.11 after China kept its benchmark lending rates unchanged at the monthly fixing on Wednesday.

The S&P/ASX 200 in Sydney gained 0.7% to 7,537.90, while South Korea’s Kospi was 1.8% higher to 2,614.30. Bangkok’s SET rose 0.5%, while India’s Sensex dropped 0.6%.

On Wall Street, the S&P 500 rose 0.6% to 4,768.37, just 0.6% shy of its record set nearly two years ago. The Dow Jones Industrial Average gained 0.7% to 37,557.92, setting a record for a fifth straight day, while the Nasdaq composite climbed 0.7% to 15,003.22.

The S&P 500 has rallied more than 15% since late October on hopes that a similar, easier approach to interest rates may soon be arriving on Wall Street.

With inflation down from its peak two summers ago and the economy still growing, the rising expectation is for the Federal Reserve in 2024 to pivot away from its campaign to hike interest rates dramatically.

The hope is the Fed can pull off what was earlier seen as a nearly impossible tightrope walk, by first getting inflation under control through high interest rates and then cutting rates before they push the economy into a recession.

A report on Tuesday showed the housing industry appears to be in stronger shape than expected. Homebuilders broke ground on many more homes in November than expected, roughly 200,000 more at a seasonally adjusted annualized rate.

Some Fed officials have been sounding more cautious about the prospect for rate cuts since Powell’s comments last week. On Friday, for example, the president of the Federal Reserve Bank of New York said it was “premature to be even thinking” about whether to cut rates in March.

In the bond market, the yield on the 10-year Treasury slipped to 3.90% from 3.93% late Tuesday. It was above 5% in October, at its highest level since 2007 and putting tremendous downward pressure on the stock market.

In other dealings, U.S. benchmark crude oil added 70 cents to $74.64 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 56 cents to $79.79 per barrel.

The U.S. dollar retreated to 143.56 Japanese yen from 143.82 yen. The euro fell to $1.0961 from $1.0980.