Global stock index falls, dollar rises as Powell dents easing hopes
U.S. indexes end choppy session higher
Fed's Powell takes less dovish tone
Wall Street ends quarter, month with gains
Oil benchmarks fall the most in a quarter in a year
China shares surge again on stimulus rush
Updated prices after U.S. stock market close
By Sinéad Carew and Nell Mackenzie
NEW YORK/LONDON, Sept 30 (Reuters) -MSCI's global equities index fell on Monday and the dollar rose as the Federal Reserve Chair Jerome Powell dampened hopes for another big rate cut, while oilfutures ended flat after a choppy sessionon concerns about anescalating conflict in the Middle East.
Global benchmark Brent crude, however, posted its biggest monthly loss since November 2022 and its biggest quarterly drop in a year, slumping 17% in the third quarter, as waning global demand concerns overshadowed fears of the conflict curtailing supply.
Stock trading was choppy after thePowell suggested that the central bank was not in a hurry to cut rates. While some investors had been betting on more substantial easing, Powell signalled that the Fed would make two 25 basis point cuts this year if the economy evolves as expected.
"That sounded less dovish than the market had priced in. There were some expectations for a 50 basis point cut by the end of the year. That comment probably took it off the table," said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.
Wall Street indexes had rallied last week withhelp from a benign reading on core U.S. inflation on Friday that had boosted bets foranother half-point rate from the Fed.
But on Monday traders saw a 36.7% probability of a 50 basis point cut in November, down from 53.3% on Friday, according the latest reading on CME Group's FedWatch tool .
While stocks fell during Powell's speech, they regained lost ground with the S&P 500 and the Dow registering record closing highs on the last day of the quarter when many traders make last minute adjustments to their portfolios.
"The price increases at the end of the day were probably due in part to quarter-end-window dressing," said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
The Dow Jones Industrial Average .DJI rose 17.15 points, or 0.04%, to 42,330.15, the S&P 500 .SPX rose 24.31 points, or 0.42%, to 5,762.48 and the Nasdaq Composite .IXIC rose 69.58 points, or 0.38%, to 18,189.17.
For the month, the S&P 500 gained 2.01% and for the quarter it rose 5.53%.
MSCI's gauge of stocks across the globe .MIWD00000PUS fell 1.82 points, or 0.21%, to 851.02 for the day. For the month the global index was showing an increase of around 2% and for the quarter it was registering a gain of around 6%.
Along with the Fed commentary, Per Stirling Capital's Phipps said that investors were monitoring the Middle East fighting and devastation from Hurricane Helene , as well as an impending strike by U.S. port workers and news from China.
In Beijing's trading day, equities had rallied sharply after China's latest round of stimulus.
China government stimulus measures announced last week continued to boost stock markets, with the blue-chip CSI300 .CSI300 closing up 8.5%, its biggest daily gain since 2008 adding to its 25% run-up in the last five trading sessions.
The dollar rose after Powell's more hawkish tone lead traders to pare bets for a big rate cut in November.
"He took his hawkish pills,” said Steve Englander, head, global G10 FX Research and North America macro strategy at Standard Chartered Bank's NY Branch suggesting that the market may be "beginning to worry that they're serious about doing 25 (basis point cuts)."
The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.32% to 100.76.
The euro EUR= was down 0.27% at $1.1133 while against the Japanese yen JPY=, the dollar strengthened 1% to 143.61.
In Treasuries, the yield on benchmark U.S. 10-year notes US10YT=RR rose 3.6 basis points to 3.785%, from 3.749% late on Friday.
The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, rose 7.4 basis points to 3.637%, from 3.563% late on Friday.
And a closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=RR, seen as an indicator of economic expectations, was at a positive 14.6 basis points.
In energy markets,U.S. crude CLc1 settled down 1 centat $68.17 a barrel, but tumbled 7% in September in its biggest monthly decline since October 2023, and slumped 16% in its biggest quarterly drop since the third quarter 2023.
Brent LCOc1 edged down 21 cents to $71.77 per barrel. It posted a roughly 9% drop in September, its biggest decline since November 2022 and its third consecutive monthly loss, along with a near 17% quarterly drop, also its biggest in a year.
Gold eased, taking a breather after a historic rally driven by U.S. monetary easing and heightened Middle East tensions, which puts it on course for its biggest quarterly gain since early 2020.
Spot gold XAU= fell 1% to $2,631.39 an ounce. U.S. gold futures GCc1 fell 0.54% to $2,629.90 an ounce.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Reporting by Sinéad Carew, Karen Brettell, Nell Mackenzie, Dhara Ranasinghe and Wayne Cole; Editing by Susan Fenton, Toby Chopra, Keith Weir and Marguerita Choy
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