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NEW YORK (Reuters) -Global equity markets and U.S. Treasury yields rose on Tuesday ahead of the Federal Reserve’s expected interest rate hike and as markets awaited a stream of quarterly results from corporate heavyweights.
Fed officials are gathering for their July monetary policy meeting, starting from Tuesday, where the central bank’s rate tightening cycle will be top of the agenda. Most market participants expect the Fed to deliver a 25 basis point rate hike when the meeting concludes on Wednesday.
U.S. Treasury yields advanced, with benchmark 10-year notes rising to 3.898% while rate-sensitive two-year notes were up at 4.9148%.
Google-owner Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are among U.S. technology giants set to report quarterly earnings this week, giving investors a glimpse of the health of the U.S. economy. The performance of these megacap tech companies underlies the nearly 19% year-to-date rally in the benchmark S&P 500.
“There’s a bit of catch-your-breath mentality before what could really be a big market moving event with the big Fed meeting tomorrow,” said Ryan Detrick, chief market strategist at Carson Group.
“At the same time, the Fed is important but corporate earnings matter. Overall, it’s been fairly positive and people expect earnings to come in better than expected,” Detrick said.
The MSCI All-World index, which tracks equities in more than 50 countries, rose 0.52%.
Europe’s STOXX 600 gained 0.48%, led in part by shares in mining companies, which rallied after China’s leaders pledged to bolster their sputtering economy.
On Wall Street, the three main indexes were trading higher, led by gains in shares of technology, materials, and communication services companies.
The Dow Jones Industrial Average rose 0.52% to 35,411.24, the S&P 500 gained 0.40% to 4,554.64 and the Nasdaq Composite added 0.19% to 14,058.87.
“A 25 basis point hike is pretty much baked in but clearly what matters more is whether (in Fed Chair Jerome Powell’s press conference) it’s going to be a dovish or hawkish hike,” Detrick added.
Oil prices rose to three-month highs as signs of tighter supplies and pledges by Chinese authorities lifted sentiment.
Brent futures gained 2.22% to $82.87 a barrel after hitting $83.30 earlier, the highest since April 19. U.S. West Texas Intermediate (WTI) crude rose 2.35% to $78.88.
The U.S. dollar rose ahead of the Fed meeting as well as rate decisions from other key central banks, including the European Central Bank and the Bank of Japan. The dollar index rose 0.297%, with the euro down 0.54% to $1.1063.
Gold prices were choppy as the dollar rose. Spot gold dropped 0.3% to $1,954.80 an ounce, while U.S. gold futures gained 0.06% to $1,960.30 an ounce.
