Global stocks rise after Fed holds off on rate hike
BEIJING - Global stocks rallied Thursday after the U.S. Federal Reserve held off raising its key interest rate and the Japanese central bank committed to stimulus until it sees a sustained rise in inflation.
France’s CAC 40 rose 2 percent to 4,498 and Germany’s DAX added 1.9 percent to 10,636. London’s FTSE 100 advanced 1.2 percent to 6,917.
Wall Street looked set for a higher open: Both Dow and S&P 500 futures were up 0.3 percent.
The Federal Reserve kept its keyinterest rate unchanged and signaled it is likely to rise later this year. The Fed said the U.S. job market has strengthened and economic activity has picked up but business investment is soft and inflation too low. The central bank said risks to its economic outlook are “roughly balanced.” It was the first time it has used that wording since late last year, when it most recently raised rates.
The Fed said the case for a rate hike “has strengthened, but they will need more evidence of continued progress towards its objectives,” Margaret Yang of CMC Markets said in a report. Pointing to the “roughly balanced” phrasing, she said, “this statement basically increased the chances of a December rate hike.”
The Japanese central bank said it will hold its short-term policy rate at negative 0.1 percent and might cut it further. The bank said it will keep stimulating the world’s third-largest economy until inflation is higher than 2 percent. The bank said it will continue asset purchases at a rate of about 80 trillion yen ($787 billion) a year. Japan’s benchmark Nikkei 225 index jumped 1.9 percent on Wednesday on the news.
The Shanghai Composite Index rose 0.5 percent to 3,042.31 and Hong Kong’s Hang Seng added 0.3 percent to 23,748.61. Japanese markets were closed for a holiday. Seoul’s Kospi advanced 0.9 percent to 2,017.94, Sydney’s S&P-ASX 200 gained 0.4 percent to 5,497.40 and India’s Sensex rose 0.8 percent to 28,735.71.
Benchmark U.S. crude added 45 cents to $45.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 69 cents on Wednesday. Brent crude, used to price international oils, rose 36 cents to $47.19 in London. It gained 95 cents the previous session.
The dollar edged up to 100.71 yen from Wednesday’s 100.30 yen. The euro rose to $1.1235 from $1.1190.