Global markets calm after Fed signals spark sell-offs
Global stock markets drifted higher on Friday as investors restored calm a day after worries about the U.S. Federal Reserve's rate hike signals prompted sell-offs.
Europe got off to a strong start. Britain's FTSE 100 gained 1.3 percent to 6,132.16 and Germany's DAX rose 0.7 percent to 9,868.20. France's CAC-40 advanced 0.8 percent to 4,318.66. Futures showed a tepid start for Wall Street. Dow futures rose 0.2 percent while S and P futures also added 0.2 percent.
Asia stocks rose Friday, ending the week on a positive note as oil prices rebounded and investors continued to weigh the impact of a possible U.S. interest rate hike as early as June.
Japan's Nikkei 225 rose 0.5 percent to 16,736.35 while South Korea's Kospi edged up 0.1 percent to 1,947.67. Hong Kong's Hang Seng index rose 0.8 percent to 19,852.20. China's Shanghai Composite Index added 0.7 percent to 2,825.48. Australia's S and P/ASX 200 gained 0.5 percent to 5,351.30.
At the Fed's meeting in April, policymakers indicated an increase in rates was likely in June, assuming the economy and labor market continue to strengthen. Asian stocks finished lower on Thursday at the unexpected rate hike signal. Higher rates diminish the appeal of high-dividend companies to investors seeking income. "It's rare that the Fed speakers put on a unified front to warn about potential policy changes. We are usually accustomed to their mantra for data-driven policy decisions," said Bernard Aw, a market strategist at IG. "Investors are worried that if there is a rate hike in June, the economy may not be able to support it."
Markets were also eyeing a Japan meeting of finance ministers and central bankers from the G-7 for fresh trading cues, where talks could highlight a sharp divide among the club of rich nations over how to rev up global growth.
Sentiment in Europe and the U.S. had been slightly unsettled Thursday following the disappearance of an EgyptAir plane in the Mediterranean with 66 people on board, but the unease appeared not to extend to Asia.
Finance ministers and central bankers from the G-7 meanwhile kicked off meetings in Japan, with talks likely to reveal differences over currency policy and how to breathe life into the wheezing global economy.
Host Japan is keen to win an endorsement for its position that fiscal stimulus is the way to kickstart the world economy, after a rally in the yen hit exporters and accelerated a slowdown at home.
But Tokyo's threat of a market intervention to reverse the rise could put it on a collision course with other G-7 nations, including the United States and Germany, which have ruled out such moves.
"As uncertainty about the world economy has increased, macroeconomic policies and structural reforms" will be discussed, Japanese Finance Minister Taro Aso told an opening reception Thursday.
Source: China Post