Global shares rise on Fed rate hopes despite China worries
Global shares gained Thursday, although optimism about the Federal Reserve holding back on aggressive interest rate raises was countered by some uncertainty about coronavirus restrictions in China.
France's CAC 40 edged up 0.1% in early trading to 6,685.49, while Germany's DAX gained 0.3% to 14,474.23. Britain's FTSE 100 gained 0.1% to 7,475.55. The future for the Dow industrials edged 0.2% higher. The future for the S&P 500 added 0.3%.
Trading has been unsteady during the holiday-shortened week. U.S. markets are closed Thursday for Thanksgiving and will close early on Friday.
"A headwind for Asian markets is the COVID situation in China, where investors seem to be avoiding local assets and commodities as the country is seeing near-record numbers of COVID cases. Broad restrictions will keep weighing on risk sentiment and macroeconomic fundamentals, putting pressure on the outlook for cyclical stocks and commodities," Anderson Alves of ActivTrades said in a commentary.
Pandemic lockdowns have been expanding across China, including in Zhengzhou, where workers at a factor for Apple's iPhone clashed with police earlier this week.
Across China, the number of new cases reported Thursday was 31,444, the highest since the virus was first detected in late 2019.
In Asian trading, Japan's benchmark Nikkei 225 jumped 1.0% to finish at 28,383.09. Australia's S&P/ASX 200 added 0.1% to 7,241.80. South Korea's Kospi gained nearly 1.0% to 2,441.33. Hong Kong's Hang Seng rose 0.8% to 17,660.90, while the Shanghai Composite fell 0.3% to 3,089.31.
Minutes from the Federal Reserve's most recent policy meeting showed central bank officials agreed that smaller rate hikes would likely be appropriate "soon." That suggests policymakers are seeing signs that inflation may be cooling as the economy slows with more costly borrowing.
At their Nov. 1-2 meeting, Fed officials expressed uncertainty about how long it might take for their rate hikes to slow the economy enough to tame inflation. At a news conference afterward, Chair Jerome Powell stressed the Fed wasn't even close to declaring victory in its fight to curb high inflation. Other Fed officials in the weeks since the meeting have signaled that additional hikes are still necessary.
The central bank's benchmark rate currently stands at 3.75% to 4%, up from close to zero in March. It has warned that it may have to ultimately raise rates to previously unanticipated levels to cool the hottest inflation in decades.
Investors have been closely watching the latest economic and inflation data for any signs that might allow the Fed to ease up on future rate increases. Investors are worried that it could slam the brakes too hard on economic growth and bring on a recession.
In energy trading, benchmark U.S. crude lost 32 cents to $77.62 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 45 cents to $84.96 a barrel.
In currency trading, the U.S. dollar fell to 138.76 Japanese yen from 139.60 yen. The euro cost $1.0419 up from $1.0398.