London (AFP) – Stock markets mostly rose on Thursday after the US Federal Reserve delivered a widely expected interest rate hike, while falling oil prices and easing bond yields also helped calm inflation fears. Attention now turns to the Bank of England, which is expected to leave its benchmark rate unchanged as growth remains sluggish. The Bank of Japan is also widely forecast to raise interest rates on Friday as it looks to fend off high inflation and a weaker yen.
After a mixed session in Asia, European stock markets were broadly higher as oil prices eased. The US Federal Reserve lifted borrowing costs Wednesday for the first time since 2023, defying President Donald Trump’s demand for cuts, as Fed chairman Kevin Warsh insisted on the need to combat inflation that has been “too high” for “too long”. The unanimous decision was announced along with a graph showing that the vast majority of Fed policymakers saw at least one hike more was likely necessary before the end of the year.
AJ Bell investment director Russ Mould said, “the measured market reaction…reflects how widely expected the move was and a degree of comfort among investors with the idea that further increases are likely”. Traders now see the chances of an October increase at 50:50. “Treasury yields initially dipped after the decision, as investors took some comfort from the Fed standing firm in the face of Donald Trump’s noisy demands for lower rates,” said Susannah Streeter, chief investment strategist at Wealth Club. “But as the newish Chair made clear that the fight against inflation is far from over, expectations of further tightening have strengthened,” she said.
Stock markets in Tokyo, Sydney, Singapore, Taipei, Wellington, Mumbai, Bangkok, and Jakarta all advanced. Hong Kong and Shanghai dipped, while Seoul was flat. While the Middle East crisis kept oil prices above $100 a barrel, investors took some cheer from reports that Saudi Arabia is looking to return about half the capacity of its major East-West oil pipeline within days. The East-West conduit, made more essential since the effective closure of the Strait of Hormuz by Iran, was shut last week after being targeted by Yemen’s Iran-backed Houthis.
The news sent crude prices tumbling around three percent on Wednesday, and they fell further Thursday, with the international benchmark Brent dropping more than two percent. The dollar retreated against its peers after rallying Wednesday on the back of the Fed move and Warsh’s remarks, as higher rates make returns on US government bonds more attractive to international investors.
– Key figures at around 1030 GMT –
London – FTSE 100: UP 0.1 percent at 10,702.28 points
Paris – CAC 40: UP 0.2 percent at 8,155.34
Frankfurt – DAX: UP 0.5 percent at 25,662.06
Tokyo – Nikkei 225: UP 0.3 percent at 64,136.25 (close)
Hong Kong – Hang Seng Index: DOWN 0.4 percent at 24,604.29 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,875.60 (close)
New York – Dow: DOWN 1.2 percent at 51,461.90 (close)
West Texas Intermediate: DOWN 1.7 percent at $100.69 per barrel
Brent North Sea Crude: DOWN 2.2 percent at $103.48 per barrel
Dollar/yen: DOWN at 155.64 yen from 156.37 yen on Wednesday
Euro/dollar: UP at $1.1480 from $1.1464
Pound/dollar: UP at $1.3402 from $1.3377
Euro/pound: DOWN at 85.65 pence from 85.69 pence
© 2024 AFP
