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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Early Morning Call: Powell's dovish tone pushes indices, precious metals higher

Markets responded positively to Fed chair, Jerome Powell’s suggestions that smaller US rate rises may start in December.

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Equity market overview

US equity markets recorded strong gains yesterday after Federal Reserve (Fed) chair, Jerome Powell said it was time to slow the pace of coming interest rate hikes.

In his last scheduled appearance before the Fed's next meeting in two weeks, Powell said the bank was "slowing down" from the pace of 75 basis point (bp) rate hikes that have prevailed since June. But he also signalled that the economic adjustments underway could mean a long period of elevated interest rates. "Cutting rates is not something we want to do soon. That's why we're slowing down and going to try to find our way to what that right level is."

Indices in the APAC region followed the lead set by US markets. In China, the Caixin manufacturing PMI survey confirmed the downbeat data published in the official NBS survey yesterday. China's factory activity shrank for a fourth straight month in November. The index rose slightly to 49.4 from 49.2 the previous month and beat expectations of 48.9.

In Japan, the consumer confidence index declined in November to its lowest level since June 2020, to 28.6 from 29.9 a month earlier.

Equity markets in Europe also opened higher. In the UK, the Nationwide house price index rose by 4.4% in November year-on-year (YoY), after a 7.2% rise in October, and missed expectations of a 5.8% increase.

In Germany, retail sales fell more than expected, down 2.8% in October month-on-month (MoM). Economists had expected at 0.6% fall.

In the US, at 1.30pm, the market awaits personal income and spending for the month of October. Economists expect personal income to rise by 0.4% MoM, while spending should rise by 0.8%. At the same time Core PCE price index is forecast to rise by 5.9% in October YoY, after 6.2% in September.

And a bit later a 3pm, ISM manufacturing PMI is anticipated to fall below the 50 level for the first time since mid-2020, to 49.8. Last month the index managed to remain just above at 50.2. The index has been declining almost steadily since March 2021.

FTSE reshuffling

Elsewhere on the equity market, Edinburgh-based asset manager Abrdn is making a comeback to the UK's blue-chip stock index, while insurer Beazley will make its FTSE 100 debut in the benchmark's latest quarterly reshuffle.

Abrdn will re-enter the FTSE 100 next month after being demoted in August, alongside Lloyd's of London insurer Beazley and mining machinery firm Weir Group. The companies leaving the FTSE 100 are Harbour Energy, Intermediate Capital and Dechra Pharmaceuticals.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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