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    Global stocks up as traders digest Fed anti-inflation pledge

    BEIJING (AP) – Global stocks and Wall Street futures rebounded yesterday as investors digested last week’s Federal Reserve pledge to fight inflation by keeping interest rates elevated.

    London, Frankfurt and Tokyo advanced, while Shanghai declined. The euro edged up to just over USD1.

    Wall Street futures were higher after the benchmark S&P 500 index fell 0.7 per cent on Monday, adding to last week’s losses.

    Stocks tumbled after Fed chair Jerome Powell indicated on Friday the United States (US) central bank will stick to a strategy of rate hikes to cool inflation that is at multi-decade highs.

    That appeared to quiet speculation the Fed might ease off due to signs economic activity is cooling.

    Lower stock markets and weakness in consumer spending “are not enough to blow the Fed off its tightening course”, said Chris Turner of ING in a report.

    In early trading, the FTSE 100 in London opened up 0.6 per cent at 7,472.03 and Frankfurt’s DAX added 1.4 per cent to 13.079.12. The CAC 40 in Paris gained 1.1 per cent to 6,288.59.

    A currency traders watches computer monitors at a foreign exchange dealing room in Seoul. PHOTO: AP

    On Wall Street, the S&P 500 future was up one per cent. That for the Dow Jones Industrial Average gained 0.8 per cent.

    On Monday, the Dow dropped 0.6 per cent and the Nasdaq composite tumbled one per cent. In Asia, the Shanghai Composite Index lost 0.4 per cent to 3,227.22 and the Hang Seng in Hong Kong shed 0.4 per cent to 19,949.03.

    The Nikkei 225 in Tokyo gained 1.2 per cent to 28,217.36 after the official unemployment rate for July held steady and the labour participation rate, or the share of the working-age population that is in jobs, stayed at a record high.

    The Kospi in Seoul added one per cent to 2,450.93 and Sydney’s S&P-ASX 200 gained 0.5 per cent to 6,998.30.

    India’s Sensex advanced two per cent to 59,139.81.

    New Zealand and Southeast Asian markets also advanced.

    On Wall Street, the S&P 500’s 3.4 per cent drop on Friday was its biggest one-day loss in
    two months.

    Selling on Monday was widespread. Tech and healthcare stocks were the biggest decliners. Energy and utilities stocks rose.

    Investors worry rate hikes by the Fed and by central banks in Europe and Asia might derail global economic growth.

    Fed officials point to a strong US job market as evidence the biggest global economy can tolerate higher borrowing costs. Some acknowledge a recession is possible but say that might be necessary to extinguish surging inflation.

    The Fed has raised interest rates four times this year. The latest two were by 0.75 percentage points, three times its usual margin.

    Some investors had hoped that the Fed would ease up if inflation subsides. That sentiment led to a rally for stocks in July and early August.

    Investors expect another large hike at the Fed’s September meeting, though the likelihood of such a big increase is smaller following weaker-than-forecast July retail sales.

    The Fed’s preferred gauge of inflation decelerated last month, while other data shows consumer spending slowed. Wall Street will get several more updates on the economy this week.

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