“As Fed rate hike expectations are pushed back, stocks and commodities saw a big rebound and eased risk aversion”, Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp, told Bloomberg News.
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The Dow Jones industrial average and S&P 500 opened lower and attempted slight gains, before rallying after the release of the Fed minutes to close above their 50-day moving averages. Financial spreadbetters predicted bright starts for European bourses, with Britain’s FTSE 100 seen as much as 0.9 percent higher, Germany’s DAX 1.4 percent, and France’s CAC 40 1.3 percent.
Most policymakers, according to the minutes, thought the Fed’s first rate hike in a decade should still come this year and that financial market turmoil had not “materially altered” the outlook for the USA economy.
In the minutes from their September meeting, Fed officials expressed worries about an economic slowdown in China and its potential to decelerate US growth and keep inflation persistently low. Blackstone dropped 2.0 per cent.
Advancing issues outnumbered declining ones on the NYSE by 2,326 to 699, for a 3.33-to-1 ratio; on the Nasdaq, 1,751 issues rose and 970 fell, for a 1.81-to-1 ratio favouring advancers.
“Although the time for policy normalization might be near, it would be appropriate to wait for information, including evidence of further improvement in the labor market, confirming that the outlook for economic growth had not deteriorated significantly and that inflation was still on a path to return to 2 percent over the medium term”, the minutes state.
The iShares Nasdaq Biotechnology ETF (IBB) closed down 0.2 per cent after falling more than 3 per cent.
Signs of stability in Chinese equities and a bounce in oil prices have helped improve the market’s sentiment and are likely helping the rupiah and ringgit attract a few inflows, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
Both the rupiah and ringgit had slumped to 17-year lows against the dollar in September, hampered by falls in commodity prices and concerns that the prospect of rising in USA interest rates could lead to more capital outflows.
China’s Shanghai Composite Index rose 3% Thursday, as it caught up with a rally in global equities after a weeklong holiday. Brent Crude, which is used to price worldwide oils, climbed 20 cents to $51.97 a barrel in London.
Spot gold was up 0.8 percent at $1,147.56 an ounce by 0632 GMT (0132 EDT).
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Dealers said any further gains for the euro were likely to be capped around $1.1320, keeping it within a range it has held since the aftermath of the Fed’s rate decision on September 17.
