US Stocks Extend Rally, Yen Retreats Against Dollar

Wall Street stocks rose Monday ahead of a deluge of key economic news, extending a rally while the yen retreated from a recent advance.

All three major indices finished the day higher, with the Dow ending at its highest level in nearly two years.

This week's heavy schedule includes the November reading for the consumer price index and retail sales, as well as the Federal Reserve's last monetary policy decision of 2023.

"The market is taking a cautiously optimistic view ahead of some catalysts," said Art Hogan of B Riley Wealth Management.

"You enter a new week, momentum continued to carry through," he added.

Earlier, Paris pushed higher, not far from its record high in April, while the Dax set a new intraday record above 16,800 and a new closing record. London weakened, meanwhile.

The Fed's announcement Wednesday will be followed by interest rate decisions from the European Central Bank and the Bank of England on Thursday.

With all three expected to hold borrowing costs after hiking multiple times to combat high inflation, traders will be looking for clues in the banks' statements on when rate cutting is likely to start as the pace of price rises cool.

"Central bank meetings of the Federal Reserve, European Central Bank and the Bank of England are likely to be crucial in managing expectations when it comes to the timing and pace of when markets can expect to see rate cuts begin," said Michael Hewson, chief market analyst at CMC Markets UK.

With markets pricing in four US interest rate cuts starting from May, markets could gyrate if the Fed drops a surprise.

The yen retreated against the dollar on waning expectations that the Bank of Japan would tighten its ultra-loose monetary policy next week, before paring losses.

While many central banks have hiked interest rates sharply over the past couple of years in a bid to tame soaring prices, the BoJ has refused to shift from its long-term programme of sub-zero rates to kickstart the world's number three economy.

Sentiment in Asia was jarred by figures showing China slipped further into deflation last month as leaders struggled to kickstart the sputtering economy.

Consumer prices fell at their steepest pace in three years, data showed, fuelling fresh calls for the government to unveil more economic support measures.

"China's deflation situation is deepening with the triple whammy from domestic food prices, international oil price corrections and weak domestic demand," said economists at Citigroup.

"There is no time for policy hesitation to prevent a vicious loop between deflation, confidence and activities."

New York - Dow: UP 0.4 percent at 36,404.93 (close)

New York - S&P 500: UP 0.4 percent at 4,622.44 (close)

New York - Nasdaq: UP 0.2 percent at 14,432.49 (close)

London - FTSE 100: DOWN 0.1 percent at 7,544.89 (close)

Paris - CAC 40: UP 0.3 percent at 7,551.53 (close)

Frankfurt - DAX: UP 0.2 percent at 16,794.43 (close)

EURO STOXX 50: UP 0.4 percent at 4,540.19 (close)

Tokyo - Nikkei 225: UP 1.5 percent at 32,791.80 (close)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 16,201.49 (close)

Shanghai - Composite: UP 0.7 percent at 2,991.44 (close)

Dollar/yen: UP at 146.09 yen from 144.95 yen on Friday

Euro/dollar: DOWN at $1.0761 from $1.0763

Pound/dollar: UP at $1.2562 from $1.2549

Euro/pound: DOWN at 85.72 pence from 85.77 pence

West Texas Intermediate: UP 0.1 percent at $71.32 per barrel

Brent North Sea crude: UP 0.3 percent at $76.03 per barrel