Global stocks mixed after Fed says ready to act on inflation

BEIJING (AP) – Global stock markets mostly rose yesterday after Federal Reserve officials indicated they were ready to hike interest rates sooner than expected if needed to cool United States (US) inflation.

London, Tokyo, Frankfurt and Hong Kong markets advanced, while Shanghai declined.

Wall Street futures were higher. US markets were closed for the Thanksgiving holiday. They re-open today for a shortened trading session.

Fed officials at their October policy meeting said they “would not hesitate” to respond to inflation, according to notes released on Wednesday. They foresaw the possibility of raising rates “sooner than participants currently anticipated”.

That fuelled investor fears the Fed and other central banks might feel pressure to withdraw economic stimulus that has been boosting stock prices. Fed officials earlier indicated they might raise rates late next year.

Higher prices combined with stronger US hiring suggest the attitude at the next Fed meeting might be “unabashedly more hawkish,” said Tan Boon Heng of Mizuho Bank in a report.

In early trading, the FTSE in London rose less than 0.1 per cent to 7,289.90 and the DAX in Frankfurt gained 0.3 per cent to 15,927.78. The CAC 40 in Paris added 0.3 per cent to 7,063.84.

A currency trader at the foreign exchange dealing room of the KEB Hana Bank headquarters in South Korea. PHOTO: AP

Futures for the S&P 500 and the Dow Jones Industrial Average were up 0.3 per cent.

In Asia, the Shanghai Composite Index lost 0.2 per cent to 3,584.18 while the Nikkei 225 in Tokyo gained 0.7 per cent to 29,499.28. The Hang Seng in Hong Kong advanced 0.2 per cent to 24,740.16.

The Kospi in Seoul lost 0.5 per cent to 2,980.27 after the Korean central bank raised its policy interest rate by 0.25 percentage points to one per cent in line with expectations.

Sydney’s S&P-ASX 200 added 0.1 per cent to 7,407.30 and India’s Sensex gained 0.8 per cent to 58,811.46. New Zealand and Jakarta advanced while Singapore and Bangkok declined.

On Wall Street, the S&P 500 advanced 0.2 per cent. Gains in technology, real estate and energy stocks outweighed a slide in banks and materials companies.

The Dow slipped less than 0.1 per cent while the Nasdaq composite gained 0.4 per cent.

The Fed notes showed officials still believe this year’s inflation spike is likely to be temporary but acknowledged prices rose more than expected.

The notes covered the October meeting at which Fed board members voted to take the first steps to roll back easy credit and other measures to support an economic recovery from the coronavirus pandemic.

A wide range of industries have been hit by inflation pressures and disruptions in supplies of raw materials and components. Forecasters worry consumers might cut spending if retail prices keep rising.

Consumer spending rose 1.3 per cent in October, slightly more than double the previous month’s rise, according to the US Commerce Department.

The Labor Department reported the number of Americans applying for unemployment benefits fell last week to its lowest level in more than half a century.

In energy markets, benchmark US crude lost five cents to USD78.34 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 10 cents to USD81.15 per barrel in London.

The dollar fell to JPY115.36 from JPY115.48. The euro advanced to USD1.1221 from USD1.1199.