Global shares rise on Fed rate hopes despite China worries

TOKYO Global shares gained on Thursday, but optimism about the Federal Reserve holding off on aggressive interest rate increases was countered in part by uncertainty about China’s coronavirus restrictions.

France’s CAC 40 edged up 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 future of the Dow industrials edged 0.2% up. The future of the S&P 500 gained 0.3%.

Trading was not steady during the holiday-shortened week. The U.S. markets will be closed on Thursday for Thanksgiving, and will reopen early Friday. A headwind for Asian markets are the COVID situation, which is causing investors to avoid local assets and commodities in China. The country is currently experiencing near-record levels of COVID cases. Broad restrictions will continue to weigh on risk sentiment and macroeconomic foundations, putting pressure upon the outlook for cyclical stocks or commodities,” Anderson Alves from ActivTrades stated in a comment.

Pandemic lockdowns are increasing in China, including Zhengzhou where workers at an Apple-related factor clashed earlier this week with police.

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

In Asian trading, Japan’s benchmark Nikkei 225 jumped 1.0% to finish 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 Federal Reserve’s last policy meeting showed that central bank officials agreed that smaller rate increases would likely be appropriate “soon.” This suggests that policymakers are beginning to see signs that inflation is cooling as the economy slows and requires more expensive borrowing.

Fed officials expressed concern about the time it would take for rate hikes to slow down enough to control inflation at their Nov. 2 and 3 meetings. After the meeting, Chair Jerome Powell stated that the Fed was not close to declaring victory in its fight against high inflation. In the weeks that followed, other Fed officials have indicated that further hikes are necessary.

The benchmark rate of the central bank is currently 3. 75% to 4%, up from close to zero in March. It warned that it might have to raise rates to previously unanticipated amounts to cool the hottest inflation for decades.

Investors are closely monitoring the latest economic data and inflation data to see if there are any signs that the Fed might ease up on future rate rises. Investors worry that the Fed could put too much pressure on economic growth, causing a recession.

In energy trading, benchmark U.S. 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 U.S. dollar fell to 138. 76 Japanese yen from 139. 60 yen. The euro costs $1. 0419 up from $1.0398.

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