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Nov 4 (Reuters) – US equity funds continued to gain inflows for a third straight week in the week to Nov. 2, helped by expectations that the Federal Reserve would slow the pace of its interest rate hikes soon.

According to Refinitiv Lipper data, investors bought a net USD 10.19 billion worth of US equity funds, compared with purchases of USD 7.93 billion in the previous week.

Solid earnings beat from Apple Inc. (AAPL) and energy giants Chevron (CVX), Exxon Mobil (XOM) also boosted investor confidence during the reported week.

Investors purchased US large- and small-cap equity funds worth USD 6.62 billion and USD 1.59 billion respectively, although mid-cap funds witnessed outflows of USD 473 million.

By sector, health care, tech and consumer staples funds obtained inflows worth USD 630 million, USD 478 million, and USD 393 million respectively.

However, the US Federal Reserve hiked the interest rates by 75 basis points and said the peak for rates would likely be higher than previously expected.

Meanwhile, outflows from bond funds stood at just USD 14 million, a seven-week low.

Investors purchased US high yield bond funds of USD 5.07 billion, which was their biggest weekly net buying since August 2020, but government bond funds witnessed USD 1.75 billion worth of withdrawals after luring inflows for nine straight weeks.

Money market funds drew USD 46.64 billion in inflow after posting two weeks of outflows in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Chizu Nomiyama)

Nov 4 (Reuters) – European stocks rallied on Friday after US jobs data backed bets the Federal Reserve would deliver smaller rate hikes, with hopes of easing COVID-19 curbs in China boosting mining and luxury stocks.

The STOXX 600 closed 1.8% higher, with basic resources, personal & household goods and automakers leading a broad rally.

Thanks to a largely better-than-expected earnings season and hopes that central banks will slow their pace of monetary policy tightening, the benchmark index marked its fourth straight weekly gain with a 1.5% rise.

Wall Street’s main indexes held steady as a slowing pace of US job growth and rising unemployment rate suggested some loosening in labour market conditions, supporting hopes of a shift towards smaller rate hikes starting December.

“We definitely believe that the Fed will continue with its hiking cycle, although not with the jumbo hikes that we have seen during the last meetings,” said Teeuwe Mevissen, senior market economist at Rabobank.

Furthermore, China is expected to make substantial changes to its “dynamic-zero” COVID-19 policy in coming months and further shorten quarantine requirements for inbound travelers.

Luxury giants including LVMH (LVMH), Kering (PRTP), Pernod Ricard (PERP) and Hermes International (HRMS), which have a large exposure to China, climbed between 3.7% and 7.1%.

Miners rose 5.3% to post their best day in almost four months as metal prices jumped on speculation over easing COVID-19 curbs in top metal consumer China.

The Euro STOXX volatility index dropped to an 11-week low, reflecting easing anxiety among investors.

Meanwhile, data so far indicates that the euro zone is heading towards a winter recession. A survey showed euro zone business activity contracted last month at the fastest pace since late 2020 as high inflation and fears of an intensifying energy crisis hit demand.

Among other stocks, Adidas (ADSGn) shot up 21.4% to the top of the STOXX 600 after Germany’s manager magazin reported that outgoing Puma (PUMG) chief executive Bjorn Gulden is set to become the new Adidas head.

Manufacturer Andritz (ANDR) surged 10.7% as its quarterly sales and profit rose significantly.

Societe Generale (SOGN) jumped 2.6% after posting a higher-than-expected net income, while shares in Monte dei Paschi di Siena (BMPS) plunged 12.0% after the bank completed a 2.5-billion-euro (USD 2.4 billion) capital raise.

(Reporting by Shreyashi Sanyal and Ankika Biswas in Bengaluru; Editing by Subhranshu Sahu, Vinay Dwivedi and Elaine Hardcastle)

NEW YORK, Nov 3 (Reuters) – Global equities fell while US Treasury yields rose on Thursday as investors weighed hawkish commentary from Federal Reserve Chair Jerome Powell on the prospects of further interest rate hikes targeted at reining in inflation.

Market sentiment has been bearish after the Fed on Wednesday raised rates by 75 basis points and Powell said during a press conference that the “ultimate level” of interest rates is likely higher than previously estimated, and the central bank still has “some ways to go.”

Traders, who were expecting the Fed to strike a more dovish stance after delivering its fourth consecutive rate hike, were rattled.

“We’ve done 400 basis points in eight months – one of the steepest ascents in tightening in history – and to not sit back and see for a few months how the data comes in is just reckless,” said Thomas Hayes, chairman at Great Hill Capital in New York.

The MSCI world equity index, which tracks shares in 50 countries, shaved almost 2%. European stocks dropped nearly 1% after the Bank of England delivered its biggest rate rise since 1989.

On Wall Street, all three major indexes closed lower, led by a selloff in technology, communication services, financials, healthcare, and consumer discretionary stocks.

The Dow Jones Industrial Average fell 0.46% to 32,001.25, the S&P 500 lost 1.06% to 3,719.89 and the Nasdaq Composite dropped 1.73% to 10,342.94.

“I think the kind of double talk that we saw yesterday is really beginning to massively erode the credibility of anything they say. What’s going to happen is that at some point, they’re going to talk hawkish and the market is going to rally,” Hayes added.

Treasury yields were higher, with the two-year note climbing toward 5%, following comments by the Fed chair and the interest rate hikes by the US and British central banks. Both notes have pared back some gains from the previous day’s session.

The yield on the benchmark 10-year note rose to 4.149%, while the two-year yield, which typically moves in step with interest rate expectations, was up at 44.7117%.

The US dollar strengthened after the Fed’s hawkish comments, while the euro and the pound slid after the BoE’s statement. The dollar index rose 1.46%, with the euro EUR= down 0.7% to USD 0.9748.

Oil prices fell as an increase in US interest rates pushed up the dollar and heightened fears of a global recession that would crimp fuel demand.

Brent futures were down 1.5% to settle at USD 94.67 a barrel, while US West Texas Intermediate (WTI) crude fell 2.0% to settle at USD 88.17.

Gold prices fell to a more than one-month low after the dollar gained following the Fed’s stiff interest rate stance. Spot gold dropped 0.3% to USD 1,630.15 an ounce, while US gold futures settled 1.2% lower at USD 1,630.9.

(Reporting by Chibuike Oguh in New York; Editing by Chizu Nomiyama and William Maclean)

NEW YORK, Nov 3 (Reuters) – Investors rushed to guard against further declines in US stocks on Thursday, a day after the Federal Reserve dashed hopes for a downshift in the central bank’s inflation-fighting rate hikes.

Trading in S&P 500 put options, typically used as a play in defensive positions, outnumbered calls, usually employed for upside wagers, 1.5-to-1 on Thursday afternoon, the most defensive the measure has been since mid-October, according to Trade Alert data.

The rush for protection comes after Fed Chair Jerome Powell signaled that while interest rates may rise by smaller increments in the months ahead, the central bank will likely take its policy rate higher than previously expected to fight surging consumer prices.

The hawkish message was a disappointment to investors following a rally that saw the S&P 500 .SPX gain around 8% since mid-October through Tuesday on hopes that the Fed was close to a shift in the aggressive monetary policy that has bruised stocks this year. The index is down about 3% since Tuesday’s close and is down around 22% so far in 2022.

“This caught a lot of people by surprise,” said Steve Sosnick, chief strategist at Interactive Brokers. “I am definitely seeing a bit more risk aversion to the downside.”

The more defensive tone of trading is in contrast with some bullish activity in the options market prior to the Fed meeting as investors worried about missing out on a rally.

On Thursday afternoon, with the S&P 500 index-tracking SPDR S&P 500 ETF Trust’s SPY.P shares down 0.6% to USD 372.56, the most heavily traded SPY contracts were those that would guard against the ETF’s shares slipping below USD 370 by Friday.

SPY puts expiring at the end of next week, struck at the USD 350 mark, just above the ETF’s mid-October intra-day low of USD 348.11, were the fourth most actively traded SPY options on Thursday.

At the single stock level, near-term put options on battered megacaps such as Tesla (TSLA), Amazon.com Inc. (AMZN) and Apple Inc. (AAPL) were among Thursday’s most heavily traded contracts.

While investors appear anxious about more near-term volatility, expectations for a big market crash remain muted. For instance, Nations TailDex, which measures the cost of hedging against a 3-standard deviation move in the SPY ETF, was on pace to close the session at a multi-year low, down sharply over the last six months.

Still, history suggests investors may have good reason to be wary.

“Recent ‘Fed meeting volatility’ has not necessarily been confined to the Fed day itself,” Christopher Jacobson, a strategist at Susquehanna Financial Group, said in a note.

“Over the six prior Fed meetings year-to-date, the SPY has seen an average move of +/- 2.8% from the close on Wednesday (Fed day) to Friday’s close,” he said.

Though the Fed meeting is now in the rear view mirror, other events with the potential to roil markets lay ahead, including October’s employment report, scheduled for release on Friday. According to a Reuters survey of economists, non-farm payrolls likely increased by 200,000 in October.

Next week also brings the US mid-term elections on Tuesday, with S&P 500 Index options implying a +/-2.9% move the day after the election, nearly double the index’s daily average move this year, according to Goldman Sachs.

For now, “the potential for divergent returns driven by the election is clearly under-appreciated by the options market,” the bank’s analysts wrote.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Leslie Adler)