GLOBAL stocks mostly rise as ECB, BOE press pause after Fed pivot

GLOBAL equities mostly rose yesterday as the ECB and Britain pressed pause on rates after the Fed had sent Wall Street soaring on a pivot toward interest rate cuts next year.

After a torrid series of rate hikes over the past two years to tether runaway inflation, the Bank of England joined the European Central Bank and the Federal Reserve in pausing on interest rates for the second straight meeting. 

The Fed’s suggestion of monetary easing starting next year sparked a major post-meeting rally Wednesday – though trading yesterday was more volatile.

All three major US indices finished higher following a midday swoon, with the Dow ending at a fresh all-time record.

“It appears, at least for now, that the Fed has won its fight against inflation and the market is cheering that victory,” said Adam Sarhan of 50 Park Investments.

Frankfurt’s DAX index and the Paris CAC 40 vaulted to all-time highs before retreating, with the German index ending the day just into the red while Paris added 0.6% after the European Central Bank, while holding fire on rates as expected, cautioned the inflation battle is not yet won.

ECB president Christine Lagarde warned that policymakers should not “lower our guard” in fighting inflation, dousing market hopes of early drops in interest rates next year. 

She added rate cuts had not been discussed because of concern inflation could pick up again in the near term, while the ECB also cut its growth forecasts for this year and next.

London meanwhile ended 1.3% higher after the BOE decided to keep its key rate at a 15-year pinnacle of 5.25% as UK inflation declines yet remains elevated, indicating monetary policy will likely need to be restrictive for an extended period.

Amid such caveats, “there were no (market) fireworks,” noted Craig Erlam, senior market analyst with Oanda, whose over-all conclusion was the central banks “didn’t give investors much to get excited about.”

The greenback retreated against the euro and pound, while oil prices spiked almost 4% to rebound from recent six-month lows.

In Asia, the upbeat mood lifted Hong Kong, Sydney and Seoul. But Shanghai dipped on Chinese economic worries and Tokyo dropped on the stronger yen.

Key figures around 2130 GMT

New York - Dow: UP 0.4% at 37,248.35 (close)

New York - S&P 500: UP 0.3% at 4,719.55 (close)

New York - Nasdaq: UP 0.2% at 14,761.56 (close)

London - FTSE 100: UP 1.3% at 7,648.98 (close)

Paris - CAC 40: UP 0.6% at 7,575.85 (close)

Frankfurt - DAX: DOWN 0.1% at 16,752.23 (close)

EURO STOXX 50: UP 0.2% at 4,539.16 (close)

Tokyo - Nikkei 225: DOWN 0.7% at 32,68 (close)  

Hong Kong - Hang Seng Index: UP 1.1% at 16,402.19 (close)

Shanghai - Composite: DOWN 0.3% at 2,958.99 (close)

Euro/dollar: UP at US$1.0996 from US$1.0874 on Wednesday

Dollar/yen: DOWN at  ¥141.87 from  ¥142.89

Pound/dollar: UP at US$1.2764 from US$1.2618

Euro/pound: DOWN at 86.12 pence from 86.18 pence

West Texas Intermediate: UP 3.0% at US$71.58 per barrel 

Brent North Sea crude: UP 3.2% at US$76.61 per barrel – AFP, December 15, 2023.