Global stocks are mixed after Fed says readiness to act on inflation
Global equity markets mostly rose on Thursday after Federal Reserve officials indicated they were prepared to hike interest rates earlier than expected if necessary to calm U.S. inflation.
The markets of London, Tokyo, Frankfurt and Hong Kong advanced, while Shanghai declined.
Wall Street futures were higher. American markets were closed for the Thanksgiving holiday. They reopen Friday for a shortened trading session.
Fed officials at their October policy meeting said they “would not hesitate” to respond to inflation, according to notes released Wednesday. They foresaw the possibility of increasing rates “sooner than participants currently anticipate.”
This has fueled investor fears that the Fed and other central banks are under pressure to withdraw the economic stimulus that has pushed up stock prices. Fed officials said earlier that they could hike rates at the end of next year.
Higher prices combined with stronger hiring in the United States suggests that the attitude at the next Fed meeting may be “shamelessly more hawkish,” Mizuho Bank’s Tan Boon Heng said in a report.
In early trading, the London FTSE rose less than 0.1% to 7,289.90 and the Frankfurt DAX gained 0.3% to 15,927.78. The CAC 40 in Paris gained 0.3% to 7,063.84.
Futures contracts for the S&P 500 and the Dow Jones Industrial Average rose 0.3%.
In Asia, the Shanghai Composite Index lost 0.2% to 3,584.18 while the Nikkei 225 in Tokyo gained 0.7% to 29,499.28. Hong Kong’s Hang Seng rose 0.2% to 24,740.16.
The Kospi in Seoul lost 0.5% to 2,980.27 after the Korean central bank raised its key rate by 0.25 percentage points to 1%, in line with expectations.
Sydney’s S & P-ASX 200 rose 0.1% to 7,407.30 and India’s Sensex gained 0.8% to 58,811.46. New Zealand and Jakarta advanced while Singapore and Bangkok fell.
On Wall Street, the S&P 500 rose 0.2%. Gains in technology, real estate and energy stocks offset falls by banks and materials companies.
The Dow Jones slipped less than 0.1% while the Nasdaq composite gained 0.4%.
Fed notes showed officials still believe this year’s spike in inflation is likely to be temporary, but recognized prices have risen more than expected.
The notes covered the October meeting in which members of the Fed’s board of directors voted to take the first steps to cancel easy credit and other steps to support an economic recovery from the coronavirus pandemic.
A wide range of industries have been affected by inflationary pressures and supply disruptions in raw materials and components. Forecasters fear consumers will cut spending if retail prices continue to rise.
Consumer spending rose 1.3% in October, just over double the increase the month before, according to the US Department of Commerce.
The Labor Department reported that the number of Americans claiming unemployment benefits fell last week to its lowest level in more than half a century.
In energy markets, benchmark US crude fell 5 cents to $ 78.34 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to set the price of international oils, gained 10 cents to $ 81.15 a barrel in London.
The dollar fell to 115.36 yen from 115.48 yen. The euro rose to $ 1.1221 from $ 1.199.