Global stocks gain as markets await Fed Chairman’s speech
Global stocks gained on Thursday as investors awaited a much-anticipated speech from the chairman of the US Federal Reserve on interest rates at the end of the week.
Benchmarks rose in Europe in early trading after ending higher in Japan, Australia, South Korea and China. Trading was temporarily delayed in Hong Kong by a storm.
Market watchers say stock prices are likely to swing for some time whether the focus is on inflation control or recession risks. In Asia, a wait-and-see atmosphere has set in over the past few sessions as markets look for signs from the Fed.
“Market participants may want to see a more consistent recovery as an indicator of policy success before confidence lifts,” said Yeap Jun Rong, market strategist at IG in Singapore.
France’s CAC 40 added 0.6% in early trading to 6,424.17, while Germany’s DAX rose 0.7% to 13,312.88. Britain’s FTSE 100 edged up 0.6% to 7,519.01. US stocks were expected to drift higher, with Dow futures gaining 0.6% to 33,162.00. S&P 500 futures rose 0.8% to 4,177.75.
Chinese stocks fell this week amid recent policy rate cuts by the People’s Bank of China, which also announced policies aimed at stimulating the economy.
The Bank of Korea raised its key rate by 0.25 percentage point to 2.5% in an effort to fight inflation, even as signs of inflationary pressures appeared to be gradually easing.
“Currently available information suggests that downside risks to the global economy have increased, affected by the protracted Ukraine crisis and significant policy rate hikes in key advanced economies, while inflation has remained elevated,” it said. the bank in a statement.
According to market analysts, the recent surge in fresh produce prices remains a risk. The Bank of Korea said the country’s gross domestic product – the total value of a country’s products and services – is expected to grow 2.6% in 2022 and 2.1% in 2023.
South Korea’s economy recovered quickly as consumption rebounded and COVID-19 restrictions eased, but growth is expected to weaken as exports fall amid a global slowdown, it said. the central bank.
Japan’s benchmark Nikkei 225 edged up 0.6% to end at 28,479.01. Australia’s S&P/ASX 200 gained 0.7% to 7,048.10. The South Korean Kospi rose 1.2% to 2,477.26. Hong Kong’s Hang Seng jumped 3.6% to 19,968.38, after trading was delayed earlier due to a storm. The Shanghai Composite rose 1.0% to 3,246.25.
Stocks have been pulled higher throughout the summer on hopes that inflation was near its peak and that the US Federal Reserve might raise interest rates less aggressively than previously feared. . But recent comments from Fed officials have dampened those expectations, sending Wall Street to its worst day in months on Monday. Discouraging reports on the economy meanwhile highlighted the risk of a recession.
Wall Street’s attention remains focused on Friday, when Fed Chairman Jerome Powell delivers remarks at an annual economic conference in Jackson Hole, Wyoming. This has been the setting for emotional market speeches in the past, leading investors to hope that Powell will offer clarification on further rate hikes.
Higher interest rates slow the economy in hopes of reducing inflation. But they also risk stifling the economy if done too aggressively, and they drive down the prices of all kinds of investments.
In energy trading, benchmark U.S. crude rose 19 cents to $95.08 a barrel. Brent crude, the international standard, added 40 cents to $101.62.
In currency trading, the US dollar fell to 136.57 yen from 137.09 yen. The Euro was little changed at close to $1.00.
AP Business Writer Stan Choe contributed to this report.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama