Global stocks rise on Fed rate hopes despite China concerns

A man walks past monitors displaying Japan's Nikkei 225 index at a securities firm in Tokyo, Thursday, Nov. 24, 2022. Asian stocks rose on Thursday, though optimism that the Federal Reserve would rein in gains aggressive interest rate increases were offset by some uncertainty about the coronavirus.  Restrictions in China.  (AP Photo/Hiro Komae)

A man walks past monitors displaying Japan’s Nikkei 225 index at a securities firm in Tokyo, Thursday, Nov. 24, 2022. Asian stocks rose on Thursday, though optimism that the Federal Reserve would rein in gains aggressive interest rate increases were offset by some uncertainty about the coronavirus. Restrictions in China. (AP Photo/Hiro Komae)

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Global stocks rose on Thursday, though optimism that the Federal Reserve would rein in aggressive interest rate hikes was offset by some uncertainty about coronavirus restrictions in China.

France’s CAC 40 rose 0.1% in early trading to 6,685.49, while Germany’s DAX gained 0.3% to 14,474.23. Britain’s FTSE 100 gained 0.1% to 7,475.55. The Dow Industrials future rose 0.2%. The S&P 500 future added 0.3%.

Trading has been shaky during the holiday-shortened week. US markets are closed Thursday for Thanksgiving and will close early Friday.

“A headwind for Asian markets is the COVID situation in China, where investors appear to be shying away from local assets and commodities as the country is experiencing a near-record number of COVID cases. The broad tightening will continue to weigh on risk sentiment and macroeconomic fundamentals, putting pressure on the outlook for cyclical stocks and commodities,” Anderson Alves of ActivTrades said in a commentary.

Pandemic lockdowns have spread across China, including in Zhengzhou, where workers at an Apple iPhone factor clashed with police earlier this week.

Across China, the number of new cases reported on Thursday was 31,444, the highest since the virus was first detected in late 2019.

In Asian trade, Japan’s benchmark Nikkei 225 index jumped 1.0% to end at 28,383.09. Australia’s S&P/ASX 200 added 0.1% to 7,241.80. South Korea’s Kospi gained nearly 1.0% to 2,441.33. Hong Kong’s Hang Seng rose 0.8% to 17,660.90, while the Shanghai Composite fell 0.3% to 3,089.31.

Minutes from the most recent Federal Reserve policy meeting showed that central bank officials agreed that smaller rate hikes would likely be appropriate “soon.” That suggests policymakers are seeing signs that inflation may be cooling as the economy slows with more expensive borrowing.

At their November 1-2 meeting, Fed officials expressed uncertainty about how long it might take to raise rates to slow the economy enough to control inflation. In a subsequent press conference, Chairman Jerome Powell stressed that the Fed was not even close to declaring victory in its fight to curb high inflation. Other Fed officials in the weeks since the meeting have signaled that further increases are still needed.

The central bank’s benchmark rate currently stands at 3.75-4%, up from almost zero in March. He warned that he may ultimately have to raise rates to previously unanticipated levels to cool the highest inflation in decades.

Investors have been closely watching the latest economic and inflation data for any signs that might allow the Federal Reserve to moderate future rate hikes. Investors worry that it could slow economic growth too much and trigger a recession.

In energy trading, benchmark US crude lost 32 cents to $77.62 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 45 cents to $84.96 a barrel.

In currency trading, the US dollar fell to 138.76 Japanese yen from 139.60 yen. The euro cost $1.0419 versus $1.0398.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

This story was originally published November 24, 2022 2:27 a.m.

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