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Global stocks rebound as yields retreat after central-bank decisions
Stock markets around the world rose on Thursday after falling the day before.
Investors were reacting to decisions by major central banks about interest rates.
The Federal Reserve raised US interest rates by a quarter of a percentage point.
Its forecasts suggested there could be one more increase this year.
The Bank of England kept its rate unchanged but warned that it might need to tighten policy later.
Higher oil prices are making inflation concerns worse.
US government bond yields fell, which helped markets recover.
The dollar also weakened slightly against major currencies.
Oil prices fell because reports suggested more Saudi crude was available, reducing some worries about supply disruptions.
Global shares rose Thursday as Treasury yields retreated after the Federal Reserve’s rate increase.
Wall Street’s three major indexes gained, with the Nasdaq up 1.6%, the S&P 500 up 1.1%, and the Dow up 0.64%.
The Bank of England held rates steady but signaled that further tightening could be needed because of inflation pressures.
The dollar eased after reaching a seven-week high, while sterling fell following the Bank of England decision.
Brent crude settled nearly 1% lower at $104.82 a barrel as reports of Saudi crude cargo offerings eased supply-disruption concerns.
- Who
- Global investors, the Federal Reserve, the Bank of England, and other major central banks were involved.
- What
- Global stocks rebounded, bond yields declined, and currencies and oil prices shifted after central-bank interest-rate decisions.
- Where
- The market moves occurred across Wall Street, Europe, and global financial markets.
- When
- Thursday, September 17, following the Federal Reserve decision on Wednesday; the Bank of Japan was expected to decide rates on Friday.
- Why
- Central banks are responding to rising inflation, while investors reassessed the Federal Reserve’s more hawkish-than-expected stance.
Market Optimists
Inflation Hawks
Meaning of the Federal Reserve’s stance
Market Optimists
Some investors viewed the Federal Reserve’s hawkish tone as more talk than imminent action and focused on strong economic fundamentals.
Inflation Hawks
The Federal Reserve’s projections pointed to another rate increase this year, reinforcing concerns that monetary policy could remain restrictive.
Path for interest rates
Market Optimists
The rebound in stocks and retreat in bond yields suggested investors were becoming more comfortable with the central banks’ decisions.
Inflation Hawks
The Bank of England warned that further tightening might be necessary as higher oil prices add to inflation pressures, while other central banks were also leaning toward higher rates.
Key facts
- Federal Reserve decision
- Raised interest rates by 0.25 percentage points unanimously on Wednesday.
- Federal Reserve outlook
- Its dot plot signaled one additional rate hike this year.
- Bank of England decision
- Left interest rates unchanged but indicated further tightening could be needed.
- US 10-year Treasury yield
- Fell 5.53 basis points to 4.949%.
- Global stocks
- MSCI’s gauge rose 0.79% and was poised to end a three-session losing streak.
- Brent crude
- Settled nearly 1% lower at $104.82 per barrel.
- Currency moves
- The euro rose 0.09% against the dollar, while sterling fell 0.22% to $1.3351.
Quotes
James St. Aubin
Chief investment officer at Ocean Park Asset Management
“The big kicker from the equity-market perspective is that the hawkish tone was a bit more than what they were expecting and now we are settling in and investors are starting to say, 'well, maybe that was more talk than anything'.”
livemint.com
Sources
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