- The Federal Reserve held interest rates steady Wednesday, and Fed Chairman Jerome Powell said the US central bank would be patient with hikes. Stock markets quickly moved higher, with the Hang Seng approaching a four-month high.
- Also Wednesday, Facebook announced fourth-quarter earnings that beat Wall Street expectations. Facebook soared 11% on Thursday in premarket trading.
- “The very dovish tone from the Fed is clearly supportive to risk,” an economist at Fidelity International said.
The Federal Reserve’s dovish stance on the US economy, along with positive results from the tech giant Facebook, has sparked a global stock market rally.
The Fed held interest rates steady Wednesday, and its chairman, Jerome Powell, said the US central bank would be patient with rate hikes. In its assessment of the economy, the Fed did not make any significant changes, characterising growth as “solid” and the job market as “strong.”
The stance was “a surprisingly dovish policy U-turn by the US central bank,” Mike van Dulken and Artjom Hatsaturjants at Accendo Markets said in a note to clients. They said the Fed comments, along with Facebook’s fourth-quarter earnings announcement that beat Wall Street expectations, had helped buoy markets.
Here’s the roundup as of 9:05 a.m. in London (4:05 a.m. in New York):
- US futures gained. Nasdaq futures were up 0.4% after the underlying index on Wednesday closed 2.6% higher. Futures on the Dow Jones Industrial Average and the S&P 500 were posting slight gains, up about 0.1% each.
- Facebook soared 11% in premarket New York trading. Facebook on Wednesday posted sales of about $US17 billion for the quarter, a stunning 30% gain from the same period last year.
- The FTSE 100, the Dax Index, and the CAC Index were all up at least 0.5%. The benchmark Euro Stoxx 50 was up about 0.2%.
- The Shanghai Composite rose 0.4%, and the Hang Seng jumped 1.1%, reaching an almost four-month high.
“The very dovish tone from the Fed is clearly supportive to risk,” said Anna Stupnytska, a global economist at Fidelity International. “Remarkably,” she said, the dovish guidance and the Fed’s change of vocabulary – “adjustments” to the target range for the federal funds rate has replaced “increases” – put “interest rate cuts back on the table.”
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