NEW YORK, May 26 (Reuters) – Global stock markets rose sharply on Thursday and bond yields fell as latest US Federal Reserve surprises did not help allay immediate concerns about the impact of rising interest rates on economic growth.
Wall Street extended its rally from Wednesday. By mid-morning, the top three U.S. stock indexes were up more than 1%, and the discretionary consumer led the S&P 500 sectors.
The MSCI benchmark for global equities (.MIWD00000PUS) rose 1.15% at 10:45 a.m. EDT (1445 GMT). Europe’s STOXX 600 (.STOXX) pan-regional stock benchmark rose 0.74%, while with a softer mood, the broader Asia-Pacific stock index of MSCI outside Japan (.MIAPJ0000PUS) fell 0.01%.
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The Dow Jones Industrial Average (.DJI) was up 460.25 points, or 1.43%; the S&P 500 (.SPX) gained 59.69 points, or 1.50%; and the Nasdaq Composite (.IXIC) added 196.69 points, or 1.72%.
The minutes of the May meeting of the Fed, released on Wednesday, showed a 50 basis point rise supported by the majority in June and July to combat inflation, which eased investor concern that aggressive measures of the Fed could lead to a recession.
“US equities are recovering, as investors saw both the Fed’s actions as a commitment to a gradual (tightening) policy to fight inflation and after a few retailers provided optimistic outlook.” said OANDA analyst Edward Moya.
However, this positive sentiment was fragile, as policymakers seemed to be left out to take more aggressive action if inflation persists at its current levels.
“The Fed has pledged to offer a couple of half-point rate hikes to the Jackson Hole Symposium, and that has eliminated the risk of aggressive hardening in the short term,” Moya said.
Data on Thursday showed that the number of Americans applying for new unemployment benefits fell more than expected last week, as the labor market remains tight, while a separate report confirm that the US economy contracted in the first quarter. Read more
In Asia, Chinese blue chips (.CSI300) reversed previous losses to rise 0.25% after struggling to find direction for most of the session as investors worried about signs of a slowdown , but were comforted by Prime Minister Li Keqiang’s comments on stabilizing the troubled economy. .
South Korea’s central bank raised interest rates for a second straight meeting as it struggles with consumer inflation to its 13-year high. Read more
In foreign exchange markets, the dollar fell closer to a one-month low on Tuesday. The dollar index, which tracks the US unit against a basket of major counterparts, fell 0.088%, with the euro up 0.26% to $ 1.0708.
U.S. Treasury yields have declined. The 10-year yield fell to its lowest level since April and dropped last to 2.7505%.
Crude oil rose sharply in the face of low supply, with US crude 3.35% to $ 114.03 a barrel and Brent 2.59% to $ 116.98 a barrel .
Gold prices fell on Thursday as Fed minutes diminished the metal’s attractiveness as a safe haven asset.
Gold on the spot fell 0.2% to $ 1,848.99 an ounce at 10:04 am EDT (14:04 GMT). U.S. gold futures also fell 0.28% to $ 1,841.10.
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Report by Elizabeth Dilts Marshall, Danilo Masoni and Andrew Galbraith; additional report by Vidya Ranganathan; edited by Emelia Sithole-Matarise and Jonathan Oatis
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