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Wall Street opens sharply higher, clawing back more ground

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Stocks are opening sharply higher again on Wall Street as the market continues to claw back more of the ground it lost in a miserable several weeks that brought the S&P 500 to its lowest point of the year last Friday. The benchmark index was up just over 2% in the early going Tuesday. Other major U.S. indexes were also higher. Treasury yields continued to pull back from their multiyear highs. European markets also posted strong gains. Australia’s market jumped 3.8% overnight after that country’s central bank made an interest rate increase that was smaller than previous ones. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

U.S. futures are sharply higher Tuesday, potentially extending a quarter-opening rally this week after a dismal September. Futures for the Dow Jones industrials jumped 1.3% and futures for the benchmark S&P 500 rose 1.6% following Monday’s 2.6% gain. The tech-heavy Nasdaq composite, which has been pummeled, lead the way with a 2% leap.

It is hoped by many investors that the Federal Reserve might ease off on its aggressive interest rate hikes intended to beat down high inflation that has rattled businesses as well as families. By raising rates, the Fed is making it more expensive to buy a house, a car or most anything else on credit with the goal of slowing the economy just enough to starve inflation of the spending that has driven prices higher.

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The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March. Most traders expect that to be more than a full percentage point higher by early next year. But stresses are building in financial markets and corporate profits have weakened as central banks around the world hike rates in concert. Australia’s S&P/ASX 200 jumped 3.8% to 6,699.30 after its central bank boosted its benchmark interest rate for a sixth consecutive month to a nine-year high of 2.6%. The Reserve Bank of Australia’s increase of a quarter percentage point to the cash rate was smaller than those at recent monthly meetings. When the bank lifted the rate by a quarter percentage point at its board meeting in May, it was the first rate hike in more than 11 years. It’s now at its highest point since August 2013, when the bank cut the rate from 2.75% to 2.5%.Besides stocks, lower rates also boost prices for everything from cryptocurrencies to gold, which can suddenly look a bit more attractive when bonds are paying less in income.

Elsewhere, Japan’s benchmark Nikkei 225 added nearly 3.0% to finish at 26,992.21. South Korea’s Kospi gained 2.5% to 2,209.98. Markets in Hong Kong and Shanghai were closed for holidays. At midday in Europe, France’s CAC 40 gained 3.4%, Germany’s DAX rose 2.9% and Britain’s FTSE 100 added 1.9%. The latest update on the U.S. jobs market, the labor turnover report, arrives Tuesday. The more consequential monthly jobs report is out Friday. . It will be the last jobs report before the Fed makes its next decision on interest rates, scheduled for Nov. 2. Continued strength would give the central bank more leeway to keep hiking. Traders say the likeliest move is a fourth straight increase of a whopping three-quarters of a percentage point, triple the usual move.

In energy trading, benchmark U.S. crude added $1.16 to $84.79 a barrel. It jumped Monday amid speculation big oil-producing countries could soon announce cuts to production. Brent crude, the international standard, added $1.44 to $90.30 a barrel. In currency trading, the U.S. dollar was stable at 144.81 Japanese yen from. The euro cost 98.90 cents, up from 98.40 cents.

FPIs pump in Rs 8,600-cr in Sep; pace of investment slows

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After infusing more than Rs 51,000 crore last month, foreign investors have slowed down the pace of equity buying in India in September so far, as they invested a little over Rs 8,600 crore, on sharp depreciation in rupee. Going forward, Foreign Portfolio Investors (FPIs) are unlikely to buy aggressively amid rising dollar, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Indication of further rate hike by the US Federal Reserve, fears of a recession, depreciating rupee and continued tensions in Russia and Ukraine will affect FPI flows, Basant Maheshwari, smallcase manager and Co-founder, Basant Maheshwari Wealth Advisers LLP, said.

FPIs turned net buyers in July after nine straight months of net outflows, which started in October last year. Between October 2021 till June 2022, they sold Rs 2.46 lakh crore in the Indian equity markets. According to the data, FPIs have bought equity to the tune of Rs 8,638 crore during September 1-23.

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However, FPI activity has turned highly volatile with alternate bouts of buying and selling. They have sold on seven occasions in this month so far. In fact, in the last two trading sessions, they have pulled out Rs 2,500 crore from the Indian equity markets. Vijayakumar has attributed increased FPI selling in recent days to rising dollar and rising bond yields in the US.

In addition, the 75 basis points (bps) rate hike by the US Fed for the third consecutive time to control rising inflation and the surging dollar have impacted FPI buying, Wealth Advisers LLP’s Maheshwari said.

“The US Fed’s hawkish tone on interest rates and the fear of a global recession fuelled pessimism among investors,” Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities, said.

Foreign investors have been slowing down their equity buying in India since September. The scenario turned adverse after a hotter-than-expected inflation report dashed hopes that the US Fed would scale down its rate hikes in the coming months. The August US inflation edged 0.1 per cent higher from the preceding month to 8.3 per cent. Compared to one year ago, it eased as it was 8.5 per cent previously.

The aggressive stance of the central bank chair, which made it apparent that the Fed will once again go for another 75 bps hike for the fourth consecutive time in its next meeting as well, dented sentiments and turned investors risk averse towards emerging markets like India, Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.

Also, currency movement is another factor that FPIs track very closely as it has a significant impact on the returns that they make on their investments in any country. Therefore, the outflows tend to accelerate in a scenario of rapid currency depreciation.

The sharp depreciation in Rupee as it touched all-time low of Rs 81.09 against the dollar does not augur well for foreign investments, he added.

“With the dollar index above 111 and the US 10-year bond yield above 3.7 per cent FPIs are unlikely to buy aggressively, going forward. The situation will change if the dollar index and US bond yields decline,” Vijayakumar said. In addition, foreign investors have pumped in Rs 5,903 crore in the debt market during the month under review.

Apart from India, FPI flows were positive for Indonesia and Philippines, on the other hand, South Korea, Taiwan and Thailand witnessed outflows during the period under review