Global stocks rise after Fed talks tough on inflation, as oil steadies after sliding thanks to recession fears
OHANNES EISELE/AFP/Getty Images
- Global stocks edged up Thursday as investors absorbed the latest Fed minutes, but still fretted about recession.
- US stock futures pointed to gains at the open, after closing a volatile session higher Wednesday.
- Oil prices hovered around $100 a barrel amid demand concerns driven by fresh Chinese COVID-19 restrictions.
Global stocks rose Thursday after the Federal Reserve reiterated its commitment to tackling red-hot inflation, while oil prices steadied after falling as investors continued to worry about the risk of recession.
Minutes from the Fed's June meeting indicated the US central bank is willing to hike interest rates by another 75 basis points in July to deter inflation from becoming entrenched. But analysts say investors appear to have looked past that and are still focused on the chance the central bank's tightening will trigger an economic downturn.
US stock futures ticked up after closing a volatile session higher Wednesday. Nasdaq 100 futures led the move higher Thursday, up 0.36% at 5:00 a.m. ET, while S&P 500 futures rose 0.29%, and Dow futures were up 0.35%.
Interest rate rises tend to serve as a headwind for stocks, but markets have already priced in a hawkish Fed, analysts said. The number of US job openings also fell less than expected in May data released Wednesday, potentially giving investors cause for optimism.
"Some stronger US data was the bright spot that may have helped equities, but it's been a bit of a random walk of late as weaker data has also recently helped equities by reining in Fed expectations," Deutsche Bank managing director Jim Reid said in a note. "So [it's] tough [for] markets to find a consistent narrative at the moment."
Investors will get an update on US weekly jobless claims later today, ahead of the closely watched monthly US jobs report on Friday.
Global stocks overall posted gains Thursday, with the MSCI World Index gaining 0.28%.
European stocks rallied in early-morning trading, with the continent's flagship Stoxx 600 index climbing 1.36% ahead of the release of European Central Bank minutes later today. Frankfurt's DAX 40 rose 1.61%, and the CAC 40 in Paris was up 1.57%.
The UK's FTSE 100 gained 1.09% after Boris Johnson agreed Thursday to resign as Conservative Party leader, but pushed to stay on as UK prime minister until October. The British pound jumped 0.55% to just under $1.20.
Elsewhere, Asian stock markets closed higher, after Samsung's better-than-expected earnings lifted spirits, with Tokyo's Nikkei 225 climbing 1.47%. The Shanghai Composite and Hong Kong's Hang Seng managed smaller gains of 0.27% and 0.26%, respectively, on reports Beijing and Shanghai will bring in more COVID-zero restrictions.
Oil prices stepped higher after two days of big losses that saw WTI crude drop below $100. Analysts said investors were focusing again on underlying tightness in supply, after fretting about recession and its impact on demand.
Global benchmark Brent crude climbed 1.1% to $101.81 a barrel Thursday, while WTI crude was up 1% to $99.52 a barrel.
"With Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of $100 oil will be with us for some time yet," Oanda senior market analyst Jeff Halley said.
Here's how other major asset classes are performing:
- The dollar gave up some of its gains, with the US Dollar Index slipping 0.24% to just under 107. The euro added 0.2% to $1.0204, after slipping closer to parity.
- The yield curve flattened as fixed-income investors eyed the hawkish Fed. US 2-year Treasury yields rose 4 basis points to 3.028%, and US 10-year Treasury yields added 4 basis points to reach 2.973%.
- Cryptocurrencies continued to track tech stocks, with bitcoin up 1.53% and ethereum climbing 3.39%, according to CoinMarketCap data.
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