Shares rise pending Fed update
NEW YORK – Stock markets mostly rose on Wednesday, recovering from recent large losses following appeasement of concerns over Chinese real estate giant Evergrande ahead of a key Federal Reserve update.
The dollar also gained against most of its biggest rivals, while oil prices gained solid support.
Nerves were assuaged by the news that Evergrande had agreed to a plan to repay interest on one of its key bonds, averting a default that many fear will undermine the domestic and global economy.
However, confidence remains at a premium as traders waited for the outcome of a Federal Reserve meeting later Wednesday, which could announce a timetable to begin cutting its broad monetary easing program.
“After seeing very bad days for stocks in recent sessions, Europe and parts of Asia were more bullish on Wednesday,” noted Russ Mold, chief investment officer of AJ Bell, who suggested that the Fed’s result “could further support the markets”.
– A more hawkish Fed? –
But Fawad Razaqzada, market analyst at ThinkMarkets, warned that “volatility” could return to the markets if the “Fed hawkish tilt, which could trigger some risk aversion.”
“The later the reduction starts, the better it will likely be for risky assets – and gold,” said Razaqzada, who added that, “overall, there is a greater risk that the Fed will show up. as being more hawkish than in June “.
The meeting of the US central bank comes against an ever-present backdrop of spikes in coronavirus infections and slowing global growth.
But despite these concerns, Wall Street was up 0.6% shortly after the opening bell while Frankfurt, London and Paris also posted similar gains.
Fed officials have signaled that by the end of the year, they will start easing the ultra-relaxed monetary policies put in place at the start of the pandemic, which were critical to reviving the global economy and stock prices.
The growing consensus is that the first announcement will take place in November and the first reduction next month. But Fed boss Jerome Powell could still provide details on the timeline.
The move comes as the Fed tries to control soaring inflation and prevent the economic recovery from overheating.
On the corporate side, Entain shares gained 6% after the British gaming giant revealed it had received a takeover offer from US rival DraftKings worth $ 22.5 billion.
– Key figures around 1400 GMT –
New York – Dow Jones: up 0.6% to 33,107.84 points
London – FTSE 100: Up 1.4% to 7,080.22
Frankfurt – DAX: Up 0.7% to 15,458.69
Paris – CAC 40: + 1.3% to 6,633.30
EURO STOXX 50: UP 1.0% to 4,137.25
Tokyo – Nikkei 225: DOWN 0.7% to 29,639.40 (close)
Shanghai – Composite: EN up 0.4% to 3,628.49 (close)
Hong Kong – Index Hang Seng: Closed for a public holiday
Euro / dollar: up to $ 1.1726 from $ 1.1724 at 8:45 p.m. GMT
Pound / dollar: DOWN to $ 1.3628 from $ 1.3659
Euro / pound: up to 86.04 pence against 85.82 pence
Dollar / yen: up to 109.57 yen from 109.21 yen
North Sea crude brent: + 1.7% to $ 75.63 per barrel
West Texas Intermediate: + 1.7% to $ 71.70 per barrel