Investors cheered words from Fed Chair Powell about slowing the pace of increasing interest rates.
ASX futures were 53 points or 0.72% higher at 7362 at 7am AEST on Thursday, indicating a rise at the open.
US stocks rose following a speech by US Fed Chair Jerome Powell who said the economy was nearing a level of restraint that “will be sufficient to bring inflation down” and that it “makes sense” for the central bank to raise rates “gradually.”
The S&P 500 rose 3.09 percent, and the Dow Jones industrial average rose 2.18 percent. The Nasdaq Composite jumped 4.41 percent, while the Russell 2000 rose roughly 2.72 percent.
Gains on Wall Street were kept in check after Powell reminded investors of the persistent effort to lift inflation to the Fed’s target. “While we are seeing some encouraging signs, we are a long way off,” he said.
In the commodities markets, Brent crude oil rose 2.87% to US$85.41 a barrel, while gold was up 0.78% at US$1,763.50.
Australian 2 Year yields fell to 3.09% and 10 Year to 3.53%. The yield on the 2 Year US Treasury notes dropped to 4.43% and the yield on the 10 Year US Treasury notes dropped to 3.71% overseas.
The Australian dollar jumped to 67.83 US cents, from 66.76 at the close yesterday. The Wall Street Journal Dollar Index, which measures the U.S. currency against 16 others, tumbled to 98.63.
Asia
Share prices in China were mostly higher on Wednesday, after a rebound from losses around Covid policy protests. The Shanghai Composite Index closed flat at 3,151.34, while the Shenzhen Composite added 0.12% to 2018.69 and the ChiNext gained 0.24% to 2345.31. When asked if the unrest would prompt China to change its zero-Covid policy, Chinese officials said they were “closely watching” the virus for developments. China’s manufacturing activity in November fell below expectations, plummeting to a level last seen in April 2022.
Hong Kong shares ended higher, with the Hang Seng index rising 2.16% after Chinese officials said that they would begin vaccinating “people over 80 years old” across the mainland. According to an official who briefed reporters on Monday, 65.8% of that age group had received booster shots.
Stocks in Japan finished lower, with the Nikkei 225 falling as industrial production fell 2.6% from a month earlier. This exceeded a Reuters poll for a 1.5% drop.
Europe
European markets ended up as investors nervously awaited euro zone inflation for November. The pan-European Stoxx Europe 600 advanced 0.78%, with auto stocks leading the market onto green ground across the board. The German DAX rose 0.29 percent and the French CAC 40 rose 1.04 percent.
The FTSE 100 finished the day up 0.81% at 7573 points, enjoying its best month since July 2017. Commodity and consumer stocks led the charge in expectation of inflation peace and a Chinese recovery and calming of Covid-policy unrest. “The declining risk of energy rationing was helping to neutralize views for cooling inflation,” said Hani Redha, a portfolio manager at PineBridge Investments in London. “There’s a lot of air for inflation to come lower, so that’s what the market is picking up on and it has positive implications for consumer discretionary.”
North America
US stocks jumped on the back of comments by US Fed Chair Jerome Powell who indicated that the central bank taking a gradual approach to tightening “would stand a good chance of being appropriate,” and that the economy was close to “meeting the Fed’s dual mandate of stable prices and full employment.”
The S&P 500 rose 2.65 percent, as the Dow Jones industrial average gained 1.70 percent. The Nasdaq Composite jumped 3.81 percent, and the Russell 2000 added about 2.02 percent.
Gains on Wall Street were muted by a warning from Powell on the continued difficulties of achieving price stability. “We have a long way to go, even if we have and have had some glimmers of hope,” he said.
“Investors are looking for that rock of certainty, something to hang your hat on for greater predictability of where the Fed’s going with interest rates,” Greg Bassuk, CEO of AXS Investments, told CNBC. “That rock has been the messaging that the pace of rate hikes can start to slow as early as December.”
