Global stocks mixed on Fed hopes, China zero-Covid reports

Global stock markets were mixed Tuesday, as traders looked ahead to the US Federal Reserve's interest rate decision hoping it will signal a more dovish approach to fighting inflation.

But early gains in US equities soon turned to red after the release of a survey showing manufacturing growth slowed in October to its weakest since mid-2020 on falling orders and prices.

The Dow Jones was down 0.4 percent in early afternoon trading.

Investors were looking for signs of optimism as US central bankers started their two-day policy meeting Tuesday, against the backdrop of persistently high inflation.

The Fed is widely expected Wednesday to announce a fourth straight 75-basis-point rate hike as it tries to rein in runaway prices -- but recent signals have suggested officials are looking to dial down the pace of increases.

Hopes it could pivot to a less hawkish stance in the coming months has sparked a rally in risk assets over the past week -- helped by signs other central banks are also trying to take a step back.

"While a 75 basis point hike looks locked in tomorrow, the messaging is what investors are interested in," said Craig Erlam, senior market analyst at OANDA.

The main European indices pared back on earlier gains through afternoon trading, but still closed in the green.

London was up 1.3 percent, Paris 1.0 percent, and Frankfurt gained 0.6 percent.

Waiting game

"The waiting game for the Fed is still on, with investors largely in the dark until the US central bank illuminates the path ahead for interest rate rises tomorrow," said Hargreaves Lansdown analyst Susannah Streeter.

In Asia, Hong Kong led the rally following unconfirmed posts on Chinese social media saying officials were putting together a committee to discuss how to move the country away from its economically damaging zero-Covid policy.

Shares jumped more than five percent after the appearance of the unverified document, which ramped up hopes the world's number two economy could begin opening up in the new year and ease the strict containment measures that have hammered productivity and markets.

Oil prices also gained on speculation of a gradual easing of the zero-Covid policy in China, a major consumer.

However, neither Chinese state media nor government officials have suggested the meeting actually took place, or that such a committee was established, raising questions about the statement's veracity.

Nonetheless, Shanghai climbed more than two percent, while the yuan also rallied after recently falling to record lows against the dollar.

Sydney was also well up after the Australian central bank lifted rates by 0.25 percentage points to a near-decade high but brushed off calls for a bigger raise.

Big earnings season

Meanwhile, positive results from multinational firms also helped lift equities.

Shares climbed in London-listed oil giant BP after it reported that third-quarter profit had more than doubled on high commodity prices, to $8.2 billion.

It is the latest energy group to report bumper earnings in recent weeks after Chevron, Shell and TotalEnergies.

Also reporting Tuesday was US drugmaker Pfizer, which recorded an 83 percent surge in Covid-19 vaccine revenues in the United States in the most recent quarter.

Ride-hailing group Uber saw shares rocket after it reported a 72 percent surge in quarterly revenues.

And shares in British grocery delivery platform Ocado soared more than 35 percent at one point after it announced a tie-up with South Korean conglomerate Lotte Shopping.

Key figures around 1630 GMT

New York - Dow: DOWN 0.4 percent at 32,614.01 points

EURO STOXX 50: UP 0.9 percent at 3,649.46

London - FTSE 100: UP 1.3 percent at 7,186.16 (close)

Frankfurt - DAX: UP 0.6 percent at 13,338.74 (close)

Paris - CAC 40: UP 1.0 percent at 6,328.25 (close)

Tokyo - Nikkei 225: UP 0.3 percent at 27,678.92 (close)

Hong Kong - Hang Seng Index: UP 5.2 percent at 15,455.27 (close)

Shanghai - Composite: UP 2.6 percent at 2,969.20 (close)

Euro/dollar: DOWN at $0.9869 from $0.9885 on Monday

Pound/dollar: DOWN at $1.1458 from $1.1465

Dollar/yen: DOWN at 148.09 yen from 148.72 yen

Euro/pound: DOWN at 86.11 pence from 86.20 pence

West Texas Intermediate: UP 2.2 percent at $88.44 per barrel

Brent North Sea crude: UP 2.1 percent at $94.83 per barrel