New York (AFP) – US and European stock markets rose Wednesday and gold hit a record high as the Federal Reserve kept alive expectations of rate cuts later this year and the British government unveiled a pro-growth budget.
In volatile trading, gold exceeded its previous high of $2,141.79 as expectations of lower interest rates hurt the dollar.
US stocks had slipped earlier this week as investors locked in profits ahead of Wednesday’s congressional testimony of Fed chief Jerome Powell.
Powell said in prepared remarks that “if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”
But he did add that bringing down inflation was “not assured.”
That was enough to give market participants hope that the central bank could start reducing interest rates in June, though it appeared to rule out a cut at March’s policy making committee.
All three major US indices climbed to end the day, even though there were also concerns surrounding embattled lender New York Community Bancorp, which announced Wednesday that it has lined up more than $1 billion from investors led by the firm of former US treasury secretary Steven Mnuchin.
The market was “not shaken” by Powell’s comments, said Steve Sosnick of Interactive Brokers.
While traders were nervous ahead of the Fed chief’s testimony, his remarks were “pretty close” to those after the most recent Fed meeting, he added.
More indications about the interest rate outlook will come Friday with the release of non-farm payrolls.
Joe Mazzola, an analyst at Charles Schwab, said regardless of the rate outlook, stocks appear well supported.
On Tuesday, “the last half hour featured a comeback, which suggests there’s buying interest near the lows and potentially puts things on more solid footing,” he said.
“The market builds in strong chances of a first rate cut by June or July.”
Eurozone stocks advanced as investors eyed Thursday’s monetary policy decision from the European Central Bank.
The ECB is expected to keep rates steady but may give clues about its future intentions.
London equities climbed as Finance Minister Jeremy Hunt announced a fresh tax cut for millions of workers ahead of a general election expected this year.
“The direct result of Jeremy Hunt’s widespread tax cuts will be higher disposable income, meaning we could see higher GDP growth in the short term,” Mahmoud Alkudsi, senior market strategist at ADSS.
“The equity market could rally if we see tangible evidence of these tax cuts boosting consumer spending and GDP growth,” Alkudsi said.
Bitcoin eased somewhat, a day after a record-breaking run, while gold marched to record heights.
The world’s biggest cryptocurrency has soared this week on tight supplies and moves towards making bitcoin investment more accessible.
World oil prices gained ground on rising risk appetite and signs of strong US energy demand, dealers said.
– Key figures around 2130 GMT –
New York – Dow: UP 0.2 percent at 38,661.05 points (close)
New York – S&P 500: UP 0.5 percent at 5,104.76 (close)
New York – Nasdaq Composite: UP 0.6 percent at 16,031.54 (close)
London – FTSE 100: UP 0.4 percent at 7,679.31 points (close)
Paris – CAC 40: UP 0.3 percent at 7,954.74 (close)
Frankfurt – DAX: UP 0.1 percent at 17,716.71 (close)
EURO STOXX 50: UP 0.5 percent at 4,915.49 (close)
Tokyo – Nikkei 225: FLAT at 40,090.78 (close)
Hong Kong – Hang Seng Index: UP 1.7 percent at 16,438.09 (close)
Shanghai – Composite: DOWN 0.3 percent at 3,039.93 (close)
Euro/dollar: UP at $1.0899 from $1.0860 on Tuesday
Dollar/yen: DOWN at 149.44 yen from 149.97 yen
Pound/dollar: UP at $1.2732 from $1.2707
Euro/pound: UP at 85.58 pence from 85.44 pence
Brent North Sea Crude: UP 1.1 percent at $82.96 per barrel
West Texas Intermediate: UP 1.3 percent at $79.13 per barrel
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© 2024 AFP
