Stocks Bounce After Fed Boss Calms Nerves Over Rates

[view original post]

Federal Reserve head Jerome Powell was confirmed to his second term on Thursday

WIN MCNAMEE

RECASTS, UPDATES throughout, CHANGES dateline

The rebound on global stock markets extended further Friday on easing fears about the pace of interest rate rises in the United States that are aimed at bringing down the country’s highest inflation in decades.

Wall Street opened higher with the Dow up 0.8 percent.

European equities were up more than one percent in afternoon trading following solid gains in Asia.

Stocks have suffered sharp losses this week, particularly on Wall Street, as investors also sought safety amid the Ukraine war and China’s Covid lockdowns.

“Investors are continuing to wrestle with worries over inflation as the oil price climbs back up again and supply concerns resurface amid ongoing geopolitical tensions,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Stocks have tumbled for much of this week on fears the Federal Reserve was planning to lift US interest rates by 75 basis points at a single meeting.

However, equities on Friday staged “a relief rally” after Fed boss Jerome Powell calmed nerves over the potential hefty increase, said Jeffrey Halley, analyst at OANDA trading group.

“The rally today looks more like a technical rebound after a torrid week than a structural turn in sentiment,” he added.

Analysts have also pointed towards positive developments in China.

“Global sentiment seems to be getting some relief as China officials suggested that Covid-related lockdowns — which have been another source of uneasiness — may be set to ease,” analysts at Charles Schwab investment bank said.

Oil prices pushed higher Friday after much volatility, while the euro struck a new five-year low against the dollar.

Bitcoin held above $30,000, a day after the cryptocurrency slumped under $27,000, its lowest level since late 2020.

Its crash this week was fuelled by the collapse of two so-called “stablecoin” cryptocurrencies — TerraUSD and Tether — which proved to be anything but stable, leaving investors panicked.

On the corporate front, Twitter’s share price plunged after Elon Musk said he was putting a temporary halt on his much-anticipated deal to buy the social media giant.

It was down 10.7 percent at $40.27 after around 10 minutes of trading.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” he wrote on the platform.

Musk, the world’s richest man and founder of automaker Tesla, had made the eradication of spam accounts and bots one of the centrepieces of his proposed $44 billion takeover of Twitter.

London – FTSE 100: UP 1.8 percent at 7,362.78 points

Frankfurt – DAX: UP 1.3 percent at 13,922.93

Paris – CAC 40: UP 1.7 percent at 6,309.49

EURO STOXX 50: UP 1.5 percent at 3,668.92

New York – Dow: UP 0.8 percent at 31,975.41

Hong Kong – Hang Seng Index: UP 2.7 percent at 19,898.77 (close)

Shanghai – Composite: UP 0.9 percent at 3,084.28 (close)

Tokyo – Nikkei 225: UP 2.6 percent at 26,427.65 (close)

Brent North Sea crude: UP 2.7 percent at $110.31 per barrel

West Texas Intermediate: UP 3.0 percent at $109.26 per barrel

Euro/dollar: DOWN at $1.0376 from $1.0382 at 2100 GMT Thursday

Pound/dollar: DOWN at $1.2196 from $1.2199

Euro/pound: UP at 85.11 pence from 85.08 pence

Dollar/yen: DOWN at 129.01 yen from 129.97 yen