Global shares rise after the Fed signals no change in policy, while China calms investor concerns about regulatory crackdowns
- Global equities rose on Thursday after the Federal Reserve kept US monetary policy unchanged.
- Investor sentiment was further underpinned by China soothing some concerns over recent regulatory crackdowns.
- Commodities rose along with a weaker dollar, with gold and silver gaining sharply.
Global shares rose on Thursday after the Federal Reserve kept monetary policy unchanged the previous day, which weighed on the US dollar, while China's markets regulator helped soothe some investor concern over a recent series of regulatory crackdowns.
US futures were mixed as Dow Jones futures were last up 0.42%, S&P 500 futures inched up 0.2% and Nasdaq futures dipped 0.04% at 05:45 am E.T. on Thursday.
As broadly expected by investors and analysts, the Fed voted to keep interest rates and asset purchases unchanged, while reiterating the US economy was recovering and a recent pickup in inflation would likely be transitory.
"Despite making progress towards tapering, the Fed has a couple of months of inflation and labor data to decide if they can start removing support. Given the chorus of pricing pressures announced this earnings season and as employers continue to struggle in finding talent, mission accomplished still seems to be in the distant future." Edward Moya, senior market analyst at OANDA said.
Investors will instead look for further messaging on the outlook for interest rates in September. The central bank noted the uptick in wholesale and consumer prices a couple of months ago, prompting a number of traders to prepare for a swifter tightening in monetary policy.
Yields on 10-year Treasury notes were last at 1.259%, holding broadly steady after the Fed's meeting. Yields recently fell to their lowest in five months, reflecting the degree of investor confidence in the central bank's ability to manage inflation.
This also caused the dollar to weaken broadly, triggering a rise in the commodities complex. Silver for example was last up 2.75%, trading at $25.56 per ounce, while copper gained 1.37% and rose to $9,797 a ton.
Oil also rose. Brent crude was last up 0.79% at $74.45 per barrel, while WTI crude gained 0.99%, rising to $73.11 per barrel.
Late on Wednesday, the Chinese securities regulator said it would continue to allow Chinese companies to list on US stock exchanges and wold take market volatility into account when introducing new regulations, according to several reports.
This eased some of the concern around crackdowns on major sectors like tech and most recently education and private tutoring in China, which have rattled markets and unleashed a wave of selling across the sectors that have been most affected.
On the Asian market, the Shanghai Composite rose by 1.49%, marking its biggest one-day rise in two months, while Hong Kong's Hang Seng finished the day 3.3% higher - its largest daily rally in a year.
European markets started their day higher on Thursday, after a measure of eurozone economic sentiment reached an all-time high in July.
"The reopening of economies is boosting service sector activity, and manufacturing continues to perform strongly. The two main risks to the outlook are the increasing impact from supply chain problems in manufacturing and the surge of the Delta variant for services." ING analysts said.
Frankfurt's DAX rose 0.34%, while the EuroStoxx 50 rose 0.35% and Paris' CAC 40 rose 0.7%.