Global markets edged higher on Thursday amid the Fed monetary policy statement. The investors’ sentiment was strongly positive during Asian trading and the optimism spread on European session. The Wall Street stock index futures are also pointing to strong increase at open.
Late last night, after the end of the two-day meeting, the Fed said that is not expecting interest rates cut in 2019, but has suggested that the course of monetary policy may change depending on economic conditions.
Most central bankers have lowered their economic forecasts for the rest of the year by half a percentage point, and Federal Reserve Governor Jerome Powell said some of them agreed to launch interest rate cuts. In its baseline scenario, committee members said they still expect a “prolonged expansion of economic activity” and move to a 2% inflation rate, while realizing that “uncertainty about this outlook has increased”.
Investors continue to look forward to the preparations for the upcoming meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, at the end of the month, which may put an end to more than a year of a trade war.
Asian markets recap
The main Asian stock indexes ended today’s trading session with increases after the US Federal Reserve hinted that it could cut key interest rates during the year if needed.
In China, the mainland index Shanghai Composite advanced by 2.38% to 2,987.12 points. Hong Kong’s benchmark Hang Seng rose by 277.36 points, or 0.98%, to 28,479.50 points. The stocks of Tencent rose by 1.6%.
On the Tokyo Stock Exchange, the local blue-chip index Nikkei 225 added 128.99 points, or 0.60%, to 21,462.86 points. Bank of Japan followed the example of the US Federal Reserve and maintained its monetary policy course. Expectedly, the regulator kept its target for short-term interest rates of -0.1% and pledged to keep yields on 10-year government bonds around zero percent. The BoJ again stressed that global risks are rising as trade strains and uncertainty about US economic policies continue to shake financial markets, indicating that the Japanese regulator is also targeting increased monetary support. The stocks of Nissan Motor fell by 0.12% after it became clear that the governments of France and Japan would discuss the company’s alliance with the French carmaker Renault.
On the other hand, South Korean Kospi rose by 0.31% to 2,131.29 points.
Australian index S&P ASX 200 posted an increase of 39.30 points, or 0.59%, to 6,687.40 points.
European markets mid-session recap
European stocks traded sharply higher Thursday morning as investors await an interest rate decision from the Bank of England.
The pan-European Stoxx 600 jumped 0.7% during the morning session, technology stocks leading gains with a 1.6% rise, while only banks and travel and leisure stocks traded in negative territory.
German index DAX 30 added 118.84 points, or 0.79%, to 12,427.37 points at 09:30 GMT. The stocks of Deutsche Bank sank by 0.8% after news that the financial institution faces another anti-money laundering investigation, this time from US federal authorities. The shares of German food delivery company Delivery Hero jumped 9% midway through the morning session, topping the European blue-chip index on the back of the company raising its full-year revenue guidance again. Other delivery services also gained on the news.
French index CAC 40 edged higher by 0.74% to 5,559.35 points at mid-session trading on Thursday. The stocks of Airbus added 0.4% after the aircraft manufacturer has been sealing deals with big buyers for its latest passenger jet at the Paris Air Show, following a surprise order by British Airways’ owner for rival Boeing’s grounded 737 Max jet. The stocks of Renault added 1.8% amid the news that France and Japan will discuss Renault-Nissan alliance at the G20 summit.
British blue-chip index FTSE 100 rose by 0.5% to 7,440.22 points at 09:30 GMT. Precious metals miner Fresnillo led gains with a 4.2% rise, having earlier jumped as much as 7%, as gold prices hit their highest in more than five years following the Fed statement. The focus on central banks continued Thursday, with the Bank of England due to announce its June policy decision at noon BST. Economists are expecting a unanimous vote to hold rates at 0.75%, despite two officials recently mooting the need for higher borrowing costs in the near future.
Wall Street pre-session recap
Wall Street stock index futures were sharply higher Thursday morning after the Federal Reserve signaled possible interest rate cuts later this year.
Around 6 a.m. ET, Dow futures indicated a positive open of more than 240 points. Futures on the S&P and Nasdaq were both seen higher, as well.
Market focus is largely attuned to monetary policy settings after the Fed signaled interest rate cuts beginning as early as July.
The investors are likely to monitor the latest weekly jobless claims figures, first-quarter current account data, and the Philadelphia Fed manufacturing survey for June due out at 8:30 a.m. ET. Leading index figures for May will follow slightly later in the session.