Global stocks are rising in relief after Fed minutes

NEW YORK, May 26 (Reuters) – World stock markets rose broadly on Thursday and bond yields fell as no last-minute hawkish surprises from the US Federal Reserve helped alleviate immediate concerns about the impact of rate hikes on economic growth.

Wall Street extended the rally from Wednesday. In the middle of the morning, all three major US stock indices rose by more than 1[ads1]%, and consumer sentiment led the S&P 500 sectors higher.

MSCI’s benchmark index for global equities (.MIWD00000PUS) was up 1.15% at 10:45 EDT (1445 GMT). Europe’s pan-regional STOXX 600 (.STOXX) benchmark index for equities rose 0.74%, while a more subdued mood led to MSCI’s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) falling 0.01%.

The Dow Jones Industrial Average (.DJI) rose 460.25 points, or 1.43%; The S&P 500 (.SPX) scored 59.69 points, or 1.50%; and the Nasdaq Composite (.IXIC) added 196.69 points, or 1.72%.

The minutes of the Fed’s May meeting, released on Wednesday, showed a majority supported interest rate hikes of 50 basis points each in June and July to fight inflation, which eased investors’ concerns that aggressive measures by the Fed could lead to a recession.

“US stocks are rising as investors viewed both the Fed’s minutes as a commitment to only gradual (tightening) policies to combat inflation and after a few traders gave optimistic prospects,” said OANDA analyst Edward Moya.

However, the positive sentiment was fragile, as politicians seemed to allow themselves to take more aggressive steps if inflation persists at current levels.

“The Fed locked itself in delivering a couple of half-point rate hikes until the Jackson Hole Symposium, and that has removed the risk of aggressive austerity in the short term,” Moya said.

Data on Thursday showed that the number of Americans who submitted new claims for unemployment benefits fell more than expected last week as the labor market is still tight, while a separate report confirmed that the US economy declined in the first quarter. read more

In Asia, Chinese blue chips (.CSI300) reversed previous losses to rise 0.25% after struggling to find direction for most of the session, as investors worried about signs of decline, but consoled themselves with comments from Prime Minister Li Keqiang on stabilizing the ailing economy.

South Korea’s central bank raised interest rates for another meeting in a row as it fights consumer inflation at its 13-year high. read more

In foreign exchange markets, the dollar fell closer to a one-month low on Tuesday. The dollar index, which follows the US unit against a curve of large peers, fell 0.088%, with the euro up 0.26% to 1.0708 dollars.

US government bond yields fell. The 10-year interest rate fell to its lowest level since April and was last down to 2.7505%.

Crude oil extended a cautious rise in signs of tight supply, with US crude up 3.35% to $ 114.03 a barrel and Brent up 2.59% to $ 116.98 a barrel.

Gold prices fell on Thursday as Fed minutes reduced the metal’s appeal as a safe haven.

Spot gold fell 0.2% to $ 1,848.99 per ounce within 10:04 EDT (1404 GMT). US gold futures also fell 0.28% to $ 1,841.10.

Reporting by Elizabeth Dilts Marshall, Danilo Masoni and Andrew Galbraith; additional reporting by Vidya Ranganathan; editing by Emelia Sithole-Matarise and Jonathan Oatis

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