Global stocks rise after Fed says rate hikes may be needed
BEIJING (AP) — Global stock markets and Wall Street futures gained on Thursday after lower oil prices helped ease fears of a spike in inflation that the Federal Reserve said could require more US interest rate hikes.
London and Frankfurt opened higher. Shanghai, Tokyo and Hong Kong are progressing. Oil prices rose slightly after falling below $100 a barrel this week.
Investors worry that aggressive rate hikes in the United States and Europe to contain price increases that are at their highest level in four decades could depress global economic activity.
“Stocks have risen because commodity and oil prices are collapsing,” said Stephen Innes of SPI Asset Management. “Both are the critical targets that Fed policy is designed to tame; therefore, inflation expectations are under control.
In early trading, the FTSE 100 in London gained 0.7% to 7,156.84. Frankfurt’s DAX gained 1.4% to 12,775.06 and the CAC 40 in Paris rose 1.3% to 5,989.14.
On Wall Street, the future of the benchmark S&P 500 rose 0.2% after notes released Wednesday at the Fed’s latest meeting said “an even tighter stance may be appropriate.” to bring inflation back to its 2% target. Fed officials have acknowledged that this could weaken the economy.
On Wednesday, the S&P 500 gained 0.4%. The Dow Jones Industrial Average added 0.2% and the Nasdaq composite rose 0.3%.
In Asia, the Shanghai Composite Index rose 0.3% to 3,364.40 and the Nikkei 225 in Tokyo gained 1.5% to 26,490.53. The Hang Seng in Hong Kong closed 0.3% higher at 21,643.58 after spending much of the day in negative territory.
Seoul’s Kospi climbed 1.8% to 2,334.27 and Sydney’s S&P-ASX 200 rose 0.8% to 6,648.00.
The Indian Sensex advanced 0.7% to 54,107.97. New Zealand fell while Southeast Asian markets rose.
The Fed raised its key rate last month by three-quarters of a point to a range of 1.5% to 1.75%, the biggest increase in nearly three decades. Chairman Jerome Powell suggested at the time that a rate hike of half or three-quarters of a point, three times the Fed’s usual margin, was likely when policymakers meet later this month.
Notes released Wednesday following the June 14-15 Fed meeting confirmed that other officials had agreed such an increase would be “likely appropriate.”
Inflation was boosted by Russia’s attack on Ukraine, which drove up the prices of oil and other raw materials, and Chinese anti-virus controls which shut down Shanghai and other industrial centers and disrupted supply chains.
Oil prices closed below $100 a barrel on Tuesday for the first time since early May, but U.S. crude is still up more than 30% this year.
Benchmark U.S. crude gained 40 cents to $98.94 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 97 cents to $98.53 a barrel on Wednesday. Brent crude, the price basis for international trade, rose 37 cents to $101.06 a barrel in London. It fell from $2.08 the previous session to $100.69.
The dollar gained 136.12 yen from 135.98 yen on Wednesday. The euro fell slightly to $1.0187 from $1.0182.
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