Global equity shares scaled a new peak on Tuesday, lifted by rising U.S. and European stocks, while the dollar gained as strong earnings bolstered sentiment as investors await the Federal Reserve's plans to taper its massive stimulus.
Sentiment was mixed in the Asian session, with equities and bonds of Chinese property developers down over worries about contagion from China Evergrande Group's debt crisis. A debt exchange from one of the country's top homebuilders triggered a flurry of credit warnings.The RBA took a major step toward unwinding the central bank's pandemic-induced stimulus by dropping targets on bond yields and saying a rate move in 2023 was possible given inflation has risen faster than forecast.
The U.S. dollar index , which tracks the greenback against a basket of six currencies, rose 0.19% to 94.105 even as the market has fully priced in a Fed taper announcement.U.S. Treasury yields drifted as the market awaited the Fed's announcement. The market does not believe economic growth is going to be very strong next year, said Joe LaVorgna, chief economist for the Americas at Natixis in New York.
"The real interest rate has stayed depressed if not slipped and that's really a function of where growth is. The market just doesn't believe growth is going to be very robust," LaVorgna said.European government bond yields fell, pausing from a sell-off sparked by the European Central Bank last week disappointing expectations of a firm push back against aggressive market pricing for rate hikes.
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