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Global Markets Wobble on Fed Decision 05/02 04:43
World markets wobbled in Thursday trading after U.S. stocks swung to a mixed
finish with the Federal Reserve delaying cuts to interest rates.
HONG KONG (AP) -- World markets wobbled in Thursday trading after U.S.
stocks swung to a mixed finish with the Federal Reserve delaying cuts to
interest rates.
U.S. shares were set to rise, as the futures for the S&P 500 surged 0.5% and
for the Dow Jones Industrial Average were 0.4% higher.
European markets opened mixed ahead of a busy day for corporate earnings.
London's FTSE 100 was up 0.4% to 8,155.28 in early trading. Germany's DAX edged
less than 0.1% lower to 17,925.06 and the CAC 40 in Paris lost 0.7% to 7,926.97.
Tokyo's Nikkei 225 index slipped 0.1% and closed at 38,236.07.
The Japanese yen surged as much as 2% in early Asia hours Thursday, driven
by speculation of another round of yen-buying intervention by Japanese
authorities and a weaker U.S. dollar following the Fed meeting. Later, the yen
reversed its course and erased its previous gains. The dollar was trading at
155.44 yen, up from 154.91 yen.
"As expected, Japan's Ministry of Finance, via the Bank of Japan, was back
selling U.S. dollars to stabilize the yen. Indeed, the Japanese government is
digging into their sizable 1.2 trillion USD war chest, looking to take profit
on the dollar they bought back in 2000," Stephen Innes, managing partner at SPI
Asset Management, said in a commentary. He said the hope was to stabilize the
yen at around 155-157 to the dollar.
In South Korea, the Kospi was down 0.3% to 2,683.65 after official data
showed consumer prices in April rose 2.9% year on year, a slower pace compared
to March.
Hong Kong's Hang Seng index added 2.4% to 18,187.56. Other markets in China
remained closed for the Labor Day holiday.
Elsewhere, Australia's S&P/ASX 200 advanced 0.2% to 7,587.00.
On Wednesday, the S&P 500 fell 0.3% to 5,018.39 after the Fed held its main
interest rate at its highest level since 2001, just as markets expected. The
index had rallied as much as 1.2% in the afternoon before giving up all the
gains at the end of trading.
The Dow Jones Industrial Average rose 0.2% to 37,903.29, and the Nasdaq
composite lost 0.3% to 15,605.48.
On the downside for financial markets, Federal Reserve Chair Jerome Powell
said out loud the fear that's recently sent stock prices lower and erased
traders' hopes for imminent cuts in interest rates: "In recent months,
inflation has shown a lack of further progress toward our 2% objective." He
also said that it will likely take "longer than previously expected" to get
confident enough to cut rates, a move that would ease pressure on the economy
and investment prices.
At the same time, though, Powell calmed a fear swirling in the market that
inflation has remained so high that additional hikes to rates may be necessary.
"I think it's unlikely that the next policy rate move will be a hike," he
said.
The Fed also offered financial markets some assistance by saying it would
slow the pace of how much it's shrinking its holdings of Treasurys. Such a move
could grease the trading wheels in the financial system, offering stability in
the bond market.
Traders themselves had already downshifted their expectations for rate cuts
this year to one or two, if any, after coming into the year forecasting six or
more.
Powell had already hinted rates may stay high for a while. That was a
disappointment for Wall Street after the Fed earlier had indicated it was
penciling in three cuts to rates during 2024.
In energy trading, benchmark U.S. crude ended three days of decline and rose
58 cents to $79.58 a barrel. Brent crude, the international standard, was up 69
cents to $84.13 a barrel.
In currency trading, the euro cost $1.0713, up from $1.0709.
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