© Reuters. FILE PHOTO: A man watches an electric board showing Nikkei index outside a brokerage at a business district in Tokyo, Japan, June 21, 2021. REUTERS/Kim Kyung-Hoon/File Photo
By Chris Prentice and Amanda Cooper
NEW YORK/LONDON (Reuters) -Global equities climbed to a more than two-year high and the touched a record peak on Wednesday, as strong earnings offset jitters related to U.S. regional banks and China’s markets.
Bonds were under modest pressure, as comments from Federal Reserve officials reaffirmed expectations that the central bank may not cut rates soon.
The U.S. dollar retreated and oil prices rose.
The MSCI world equity index, which tracks shares in 49 countries, gained 0.59% by 2:38 p.m. EST (1938 GMT) after hitting its highest since mid-January 2022. Markets got a boost from a rally in Chinese blue-chips.
On Wall Street, the rose 175.88 points to 38,697.24, the S&P 500 gained 39.93 points to 4,994.16 and the added 140.80 points to 15,749.80.
“We are at the midpoint of the 4Q earnings reporting season, and we would say that there has been more good news than bad,” Arthur Hogan, chief market strategist with B. Riley Wealth, said in a market note.
The U.S. regional banking sector remained a concern as Moody’s (NYSE:) downgraded New York Community Bancorp (NYSE:) to junk citing pressure on its funding and liquidity. The stock lost 22% on Tuesday, to be down 60% since it reported surprise losses last week.
Chinese regulators continued efforts to steady markets, placing further curbs on short selling and state investors said they were expanding their stock buying plans. President Xi Jinping would discuss the stock market with financial regulators, Bloomberg News reported.
The head of China’s securities regulator was replaced on Wednesday, according to Xinhua news agency, as policymakers struggle to stabilise the country’s main stock indexes.
“We’re looking at more than $5 trillion being wiped out from the equity markets. Clearly, they want to stem those losses, they want to introduce and change and they’re trying to be a lot more forceful about it,” Aneeka Gupta, equity strategist at wisdomtree, said.
In Europe, equities ended lower as weakness in banking shares weighed, while losses in energy heavyweights Equinor and TotalEnergies (EPA:) following corporate updates only compounded the fall.
The pan-European index closed 0.3% lower, with shares in Spain lagging regional peers and retreating 1.2%.
MORE FED SPEAKERS
Federal Reserve regional presidents Loretta Mester and Neel Kashkari welcomed the progress on inflation but signalled there was more work to do before policy could be eased.
“The events of the last few days (have) seen markets try and absorb the fact that rate cuts might have to wait until much later in the year, and what any delay means for asset prices and valuations,” CMC Markets (LON:) chief market strategist Michael Hewson said.
Fed Chair Jerome Powell on Sunday said the central bank could be “prudent” on the timing of rate cuts.
The probability of a U.S. rate cut as early as May now stands at just 39%, when it was considered a done deal only a week ago.
The , which tracks the currency against a basket of major currencies, was down at 104.04.
The yield on benchmark rose to 4.1134% compared with its U.S. close of 4.092% on Tuesday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.4225%, versus 4.408% previously.
Oil prices gained after data showed inventories grew less than expected. U.S. crude added 0.65% to trade at $73.79 a barrel. rose to $79.11 per barrel.
prices were steady as U.S. settled mostly unchanged at $2051.70.