Volkswacht Bodensee - Stocks diverge as investors caught between hope, caution

Sentiment was boosted in Asia after China avoided another night of protests, following a weekend of unrest sparked by the tough anti-Covid policy that is weighing on growth in the world's second biggest economy.

There were big rallies in Hong Kong and Shanghai, with property firms enjoying a much-needed surge, also on moves to ease funding restrictions on troubled developers.

But sentiment was tempered by warnings from top Federal Reserve policymakers that US interest rates would climb further and could go higher than initially thought to fight decades-high inflation.

Europe's main stock markets were mixed at the end of the day's trading as all three main indices on Wall Street slid Tuesday.

London closed up 0.5 percent, boosted by HSBC's announcement Tuesday that it would sell its Canadian division to Royal Bank of Canada for US$10.1 billion, which led to the bank's share price rising over four percent.

German inflation also unexpectedly slowed in November to 10 percent from a record high of 10.4 percent in October, preliminary data showed Tuesday.

Economists however cautioned against assuming inflation was now on a downhill path as households will likely face higher energy costs from January.

US consumers appeared equally gloomy about the state of the American economy after a closely watched consumer confidence index dipped to 100.2 in November, down two points from the month before, data showed Tuesday.

"Investors will need to be made of stern stuff going into the new year," Danni Hewson, AJ Bell financial analyst, said in a note.

"Volatility has been a hallmark of 2022 and the word looks set to remain an analyst favourite into the New Year and beyond."

- Looking to the Fed -

Market focus is turning to the United States, with a number of Fed officials due to speak, including boss Jerome Powell.

Noting that there has not been "any carryover momentum from the Chinese markets" on Wall Street Tuesday, Patrick J. O'Hare of Briefing.com said it "suggests... market participants are more attuned for the time being to happenings closer to home" including Powell's speech Wednesday.

"Sure, the latest developments have helped temper some of yesterday's selling activity, but they have not ignited buying efforts," he said.

Friday sees the release of key US jobs data, which could provide an idea about the central bank's plans for monetary policy.

Bets on a slowdown in its pace of rate hikes have boosted markets for the past weeks, but some high-ranking members on Monday looked to play down the chances of a more dovish pivot.

- Key figures around 1700 GMT -

New York - Dow: DOWN 0.3 percent at 33,733.05

EURO STOXX 50: FLAT at 3,934.44

London - FTSE 100: UP 0.5 percent at 7,512.00 (close)

Frankfurt - DAX: DOWN 0.2 percent at 14,355.45 (close)

Paris - CAC 40: FLAT at 6,668.97 (close)

Tokyo - Nikkei 225: DOWN 0.6 percent at 28,027.84 (close)

Hong Kong - Hang Seng Index: UP 5.2 percent at 18,204.68 (close)

Shanghai - Composite: UP 2.3 percent at 3,149.75 (close)

Brent North Sea crude: UP 0.8 percent at $83.87 per barrel

West Texas Intermediate: UP 1.4 percent at $78.34 per barrel

Euro/dollar: DOWN at $1.0345 from $1.0347 on Monday

Dollar/yen: DOWN at 138.45 yen from 138.87 yen

Pound/dollar: UP at $1.1980 from $1.1952

Euro/pound: DOWN at 86.33 pence from 86.50 pence

burs-raz/ah

L.Dubois--BTB