World markets follow Wall St higher on Fed rates promise

BEIJING (AP) – Global stock markets rose yesterday and Wall Street futures were mixed after the United States (US) Federal Reserve said its key interest rate would be kept near zero through 2023 even it forecast inflation picking up.

London and Frankfurt advanced in early trading while Shanghai, Tokyo and Hong Kong closed higher. Sydney retreated.

On Wednesday, Wall Street hit a new high after the Fed said this year’s US economic growth should rebound to 6.5 per cent – its strongest since the 1980s – and inflation will climb above two per cent for the first time in years.

Investors worry that if inflation picks up, central banks might respond by raising interest rates, which would cool economic growth. But Fed Chairman Jerome Powell’s comments at a news conference appeared to reassure them.

“The market reaction suggests investors are satisfied with the Fed’s explanations for now,” said Tai Hui of JP Morgan Asset Management in a report. He said the Fed “may need to provide more handholding” as inflation rises.

In early trading, the FTSE 100 in London advanced 0.1 per cent to 6,772.41 and the DAX in Frankfurt rose 0.6 per cent to 14,687.68. The CAC 40 in Paris was 0.4 per cent higher at 6,080.36.

On Wall Street, the future for the benchmark S&P 500 index lost 0.3 per cent while that for the Dow Jones Industrial Average was up 0.1 per cent.

On Wednesday, S&P 500 rose 0.3 per cent while the Dow gained 0.6 per cent. The Nasdaq added 0.4 per cent. In Asia, the Shanghai Composite Index rose 0.5 per cent to 3,463.07 and the Nikkei 225 in Tokyo advanced one per cent to 30,216.75.