Global markets and Wall Street futures rose on Wednesday, following comments by Fed Reserve Chairman Jerome Powell.
Powell said the United States’ fiscal policy will begin to improve and interest rates may be hiked sooner than expected.
The stock markets in London and Frankfurt started higher. Shanghai, Tokyo, and Sydney also saw significant gains.
Major Stock Indices
The S&P 500 benchmark index of Wall Street gained 0.9% on Tuesday after Federal Reserve Chairman Jerome Powell stated policy will “in all probability” function normally, as bond-buying and other easing measures wind down.
In testimony before the House Financial Services Committee, he warned if necessary, ultra-low interest rates may be hiked sooner than anticipated, in order to keep inflation from reaching a four-decade high.
At a confirmation hearing for a second term as Federal Reserve chair, Jerome Powell says the bank won’t hesitate to act if needed to contain inflation https://t.co/15AQl6bWoR
— Bloomberg (@business) January 11, 2022
A report from the financial trading firm Oanda stated Wall Street now has a clearer idea of how the Fed will moderate policy. As a result of Powell’s testimony, several investors believe they received the green light to purchase the drop.
In the first hour of trading, the FTSE 100 index in London rose 0.5 percent to 7,529.16.
The Frankfurt Stock Exchange’s DAX index rose 1.1 percent to 15,941.81. The CAC 40 index in Paris increased by 1% to 7,183.38 points.
At the time of writing, Wall Street futures for the benchmark the Dow Jones Industrial Average and S&P 500 index were both up 0.2 percent.
The S&P 500 gained 0.9 percent during the day on Tuesday, snapping a five-day losing streak. The Dow Jones industrial average climbed 0.5 percent, while the Nasdaq climbed 1.4 percent.
In Asia, the Shanghai Composite Index increased 0.8 percent to 3,595.12, while the Nikkei 225 indicator in Tokyo gained 1.9 percent to 28,765.66.
The Nikkei 225 index rose 1.9% to 28,765.66. The Hang Seng Index in Hong Kong increased by 2.60% to 24,354.68 points of value.
The Seoul Kospi rose 1.5 percent to 2,972.48 points, while the Sydney S&P-ASX 200 rose 0.7 percent to 7,438.90 points.
The Indian Sensex opened 0.8 percent higher at 61,102.89 points. New Zealand’s stock market fell, while markets in Southeast Asia rose.
Winding Down Stimulus
When Federal Reserve officials announced in mid-December they would expedite steps to wind down the stimulus that has been lifting stock prices, investors were alarmed.
In an attempt to predict how the world’s largest economy and financial markets would respond, they have been conducting extensive research.
In a separate report issued on Tuesday, the World Bank reduced its forecast for the global economy this year to 4.1% from 4.3 percent, owing in part to supply chain bottlenecks that have driven inflation.
The global economy will grow by 5.5 percent in 2021, according to the agency.
Consumer inflation data was expected to be released by the United States government on Wednesday. The index of wholesale prices will be released on Thursday.
Oil hit its highest since the Omicron outbreak, world stocks rose to one-week peaks and the dollar plumbed six-week lows after U.S. Federal Reserve Chair Jerome Powell sounded less bullish on rates than expected in testimony to Congress https://t.co/ThEtpjFj0n
— Reuters (@Reuters) January 12, 2022
In the oil markets, benchmark U.S. crude advanced 2 cents to $81.24 per barrel in algorithmic trading on the New York Mercantile Exchange, while Brent crude gained 2 cents to $81.24 per barrel.
On Tuesday, the contract gained $2.99, bringing it to $81.22. In London trading, Brent crude, which is regarded as the benchmark for worldwide oil prices, fell 11 cents to $83.61 per barrel in London trading.
It increased by $2.85 to $83.72 in the previous session. The dollar fell to 115.34 yen on Wednesday, down from 115.37 yen on Tuesday. The euro fell to $1.1364 from $1.1366, a small decrease.
