STOCK markets mostly moved higher yesterday as banking sector worries eased and traders weighed central banks’ interest rate plans in the wake of recent turmoil.

Investors have taken to heart reassurances by authorities around the world that fallout from the collapse of US regional banks and the takeover of Credit Suisse has been contained.

“Worries about the banking industry continue to ease, offering support to the broader market,” said market analyst Patrick O’Hare at Briefing.com.

Cooling inflation in Europe also boosted hopes for a pause in interest rate hikes.

“Fresh from their triumph yesterday, stocks have barrelled into a second day of gains, with the catalyst being the much weaker Spanish inflation reading this morning,” said Chris Beauchamp, chief market analyst at online trading platform IG.

Wall Street’s main indices climbed, European stock markets closed higher and Asian markets ended the day mostly in the green as well.

The banking flare-up has fanned speculation that the US Federal Reserve will have to end its inflation-fighting rate-hike campaign sooner than expected in order to avoid further destabilising the finance industry.

Some investors now predict the central bank will cut borrowing costs by year-end. Some forecasts put the rate at just above 4% by 2024, compared with more than five prior to the recent upheaval.

That has focused eyes on the Fed’s next policy meeting, with observers predicting it could mark the last increase, even though inflation is still high.

“The Fed remains in a very difficult position,” said Wolfe Research’s Chris Senyek.

“With banks stabilising, inflation still way above target, the labour market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the (policy board) will hike by 25 basis points on May 3,” he added.

US and eurozone inflation data due today should provide a clearer idea of whether monetary policymakers will have more flexibility in terms of pausing rate hikes.

Data yesterday showed inflation slowing to 7.4% in March in Germany, Europe’s biggest economy, down from 8.7% in the two previous months.

Inflation eased to 3.3% in Spain.

Some analysts believe the latest woes among banks, which have been blamed on sharp increases in rates, will force lenders to tighten access to credit which will in turn reduce the need for the Fed to hike further.

“The good news for stocks is that growth concerns have moved into the driver’s seat after the recent banking shock, where investors are now positioning for the Fed to cut and instead rely on credit tightening to tame inflation,” said SPI Asset Management’s Stephen Innes.

The softer outlook for future US interest rates weighed on the dollar, which was down against most of its major peers.

The weaker greenback also helped dollar-denominated oil prices reverse earlier losses.

Shares in British energy infrastructure group Petrofac soared 70% after it and Hitachi Energy secured a multi-billion-euro deal to expand offshore wind capacity in the Dutch-German North Sea.

The Hong Kong index rose as Alibaba extended gains after surging 12% Wednesday on news the Chinese tech giant intends to split into six units.

Key figures around 2100 GMT

New York - Dow: UP 0.4% at 32,859.03 (close)

New York - S&P 500: UP 0.6% at 4,050.83 (close)

New York - Nasdaq: UP 0.7% at 12,013.47(close)

London - FTSE 100: UP 0.7% at 7,620.43 (close) 

Frankfurt - DAX: UP 1.3% at 15,522.40 (close)

Paris - CAC 40: UP 1.1% at 7,263.37 (close)

EURO STOXX 50: UP 1.3% at 4,285.42 (close)

Tokyo - Nikkei 225: DOWN 0.4% at 27,782.93 (close)

Hong Kong - Hang Seng Index: UP 0.6% at 20,309.13 (close)

Shanghai - Composite: UP 0.7% at 3,261.25 (close)

Euro/dollar: UP at US$1.0910 from US$1.0845 on Wednesday

Pound/dollar: UP at US$1.2385 from US$1.2316  

Euro/pound: UP at 88.03 pence from 88.01 pence 

Dollar/yen: DOWN at  ¥132.67 from  ¥132.85

Brent North Sea crude: UP 1.3% at US$79.27 per barrel

West Texas Intermediate: UP 1.9% at US$74.37 per barrel – AFP, March 31, 2023.