Global Stocks Follow Wall Street Higher on Fed
Global stocks climbed on Thursday after the Federal Reserve signaled interest rate-increases were on hold, boosting major indexes to levels not seen since early December.
The Stoxx Europe 600 rose 0.4% in the opening minutes of trading, pushed higher by a 1.9% increase for its energy sector after Royal Dutch Shell, up 3%, released earnings and announced further share buybacks. The index was on course to close at its highest since Dec. 3.
Trading was also upbeat in Asia, where Hong Kong’s Hang Seng rose 1.1% to hit a four-month high, with the index’s tech constituents among its sharpest climbers after a slew of corporate earnings for that sector.
The Chinese yuan was last up 0.2% against the dollar, close to a six-month high, as investors absorbed better-than-expected purchasing managers index figures and waited for the second day of high-level trade talks between Beijing and Washington–though some investors had low expectations.
“I’ll be surprised if there’s anything interesting that comes out of those meetings. It’ll be hard to get anything done in 48 hours, but both sides will want to announce progress,” said Craig Birk, chief investment officer at Personal Capital.
Japan’s Nikkei climbed 1.1%, with the yen up 0.4% against the dollar, after industrial production numbers beat market expectations. The data outweighed remarks from the Bank of Japan, in which some board members expressed growing concerns about global growth.
The Fed echoed those doubts around growth Wednesday when it left interest rates unchanged. Chairman Jerome Powell said in a news conference that “the case for raising rates has weakened somewhat.”
Mr. Powell wouldn’t say whether the Fed’s next rate move was more likely to be an increase or a cut, and he reiterated that future decisions would “depend entirely on the data.” The decision put nonfarm jobs figures, due out Friday, in particularly sharp focus.
U.S. stocks extended their rally after the Fed’s guidance, with the Dow Jones Industrial Average posting its strongest gain since Jan. 4 and returning to its level of Dec. 4.
The yield on 10-year U.S. Treasurys was last 2.666%, down from 2.694% late Wednesday. Yields and prices move in opposite directions.
The WSJ Dollar Index was last down 0.3%, extending its five-day fall to 1.2%.
Futures put the S&P 500 on course to edge 0.1% higher at the open, and the Nasdaq-100 was set to climb 0.5%. The index has benefited in recent sessions from a wave of tech-sector corporate earnings.
Chip maker AMD surged 20% after projecting stronger-than-expected revenue for the year, and Facebook shares jumped 11.5% in premarket trading after posting a record quarterly profit.
Low expectations this earnings season have allowed equities to recoup most of their losses from December, the worst month for the S&P 500 in 87 years.
“Our worst fears have not been realized and the commentary is that results are good enough. People were worried about whether this was the start of a continuous decline,” said Patrick Kaser, managing director and portfolio manager at Brandywine Global.
For the tech sector in particular, “the first half of the year is as bad as it’ll get and people are forecasting a recovery in the second half,” Mr. Kaser said.
General Electric, ConocoPhillips and United Parcel Service were among the companies due to release corporate earnings Thursday.
In commodities, New York gold prices were up 0.8% at $1,320.80 a troy ounce, hitting fresh eight-and-a-half-month highs.
Source: Dow Jones