Fed pins US interest rate, reignites demand for stocks worldwide
ALBAWABA – Stocks worldwide rallied on Thursday on news that the United States (US) Federal Reserve pinned the benchmark US interest rate late Wednesday and the dollar slid as traders and investors turned to equities.
Stocks worldwide, including Asian, European and US markets rallied on Thursday, Reuters reported, after Fed Chief Jerome Powell announced the central bank will pin the US interest rate for now.
Risks are now "more two-sided" and almost "balanced", Powell said, noting the pause is intended to allow the Fed to collect more data and assess the impact of current policy measuLres on the economy.
Apparently, he said, the Fed is making progress on inflation and, crucially, expectations of inflation "were in a good place", despite strong economic activity and a hot labor market.
Bloomberg reported Thursday that the Bank of America Corp. indicator, which compiles the recommended allocation to stocks by Wall Street strategists, is moving closer to “buy”.
The gauge’s current level implies a 15.5 percent price return on the S&P 500 Index over the next 12 months, strategists led by Savita Subramanian said Wednesday in a note to clients, according to Bloomberg. The “Sell-Side Indicator” tumbled in October by the most in a year, and is approaching a level that indicates an extreme degree of bearishness, the analysis shows.
Notably, bearish is actually bullish for stocks.
“The SSI has been a reliable contrarian indicator – in other words, it has been a bullish signal when Wall Street was extremely bearish, and vice versa,” Subramanian wrote.
Stocks worldwide up, except Shanghai
The S&P 500 dropped 2.2 percent in October, capping its first three-month slump since early 2020.
Escalating tension in the Middle East and surging Treasury yields dented already shaky sentiments, while losses across US stocks and other risk assets supported risk-off sentiment.
Nonetheless, the S&P 500 is still up about 10 percent this year.
Meanwhile, equity benchmarks advanced across the Asia-Pacific from Sydney to Hong Kong, with tech firms at the forefront, with the South Korean Won led emerging-market currencies higher as the yen also advanced.
All three main indexes rallied in New York, with the Nasdaq and S&P 500 up more than one percent, Agence France-Presse (AFP) reported Thursday morning.
Hong Kong, Tokyo, Sydney, Singapore, Mumbai, Bangkok, Seoul, Taipei, Jakarta and Wellington were all sharply higher, except for Shanghai, sliding on lingering worries over China's economy.
Stocks Worldwide: Markets Summary by Bloomberg and AFP
S&P 500 futures rose 0.1 percent as of 6:38 a.m. London time.
The S&P 500 rose 1.1 percent
Nasdaq 100 futures rose 0.3 percent. The Nasdaq 100 rose 1.8 percent
Japan’s Topix rose 0.5 percent
Hong Kong’s Hang Seng rose 0.8 percent
The Shanghai Composite fell 0.2 percent
Euro Stoxx 50 futures rose 0.6 percent
Tokyo - Nikkei 225: UP 1.1 percent at 31,949.89 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 17,230.59 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,009.41 (close)
London - FTSE 100: UP 0.8 percent at 7,398.90
