Global stocks rise after Fed chair says inflation temporary
BEIJING (AP) — Global stock markets and U.S. futures rose on Thursday after the Federal Reserve chairman said the recent burst of U.S. inflation probably is temporary, helping to calm fears central banks might roll back economic stimulus.
London opened higher, while Shanghai, Tokyo and Hong Kong advanced. Frankfurt and Sydney declined.
Overnight, Wall Street's benchmark S&P 500 index rose 0.5% to near last week's all-time high after Fed chairman Jerome Powell said inflation is mostly in areas that suffer supply shortages. He said inflation that hit 5% over a year earlier in May is likely to subside as economic activity revives.
Powell “affirmed a more balanced policy stance to some recent hawkish Fed rhetoric,” Anderson Alves of ActivTrades said in a report.
In early trading, the FTSE 100 in London rose 0.2% to 7,102.18 while the DAX in Frankfurt shed 0.4% to 15,578.84. The CAC 40 in Paris was off 0.3% at 6,589.86.
On Wall Street, the S&P 500 future was up 0.1% and that for the Dow Jones Industrial Average was 0.2% higher.
On Tuesday, the Dow gained 0.2% after Powell acknowledged prices for used cars, airline tickets and some other goods were higher than anticipated by the Fed but said the increases would be temporary. The Nasdaq composite rose 0.8%.
“The incoming data are very much consistent with the view that these are factors that will wane over time,” Powell said in an appearance before Congress.
In Asia, the Shanghai Composite Index advanced 0.2% to 3,566.22 and the Nikkei 225 in Tokyo ended little-changed at 28,874.89 after spending the day in positive territory. The Hang Seng in Hong Kong rose 1.8% to 28,817.07.
The Kospi in Seoul was 0.4% higher at 3,2,76.19 while Sydney's S&P-ASX 200 shed 0.6% to 7,298.50.
India's Sensex sank 0.2% to 52,457.11. Jakarta declined while New Zealand and other Southeast Asian markets advanced.
Also Wednesday, the preliminary version of a monthly survey of Japanese manufacturers showed June activity weakened amid shortages of processor chips and anti-coronavirus restrictions. Measures of production, output and export orders all declined.
Most major central banks have kept interest rates near record lows over the past year, helping to propel a stock market rebound. Investors are wavering between optimism about the rollout of coronavirus vaccines and unease that rising inflation as economic activity revives might lead central bankers to cut short that support.
Markets are close to record highs, but that masks churning below the surface after the Fed said last week it might consider raising short-term interest rates by late 2013, earlier than expected.
In cryptocurrencies, Bitcoin was trading at just under $34,000 a day after falling below $30,000.
Prices of cryptocurrencies plunged after Chinese banks said Monday they would step up enforcement of a government ban on trading.
In energy markets, benchmark U.S. crude gained 61 cents to $73.46 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, advanced 68 cents in London to $74.76 per barrel.
The dollar rose to 110.89 yen from Tuesday's 110.63 yen. The euro was unchanged at $1.1936.