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World stocks have risen in tandem with Wall Street in response to the Fed’s promise to raise interest rates.

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World stocks have risen in tandem with Wall Street in response to the Fed's promise to raise interest rates.
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World stocks have risen in tandem with Wall Street in response to the Fed's promise to raise interest rates.

World stocks have risen in tandem with Wall Street in response to the Fed’s promise to raise interest rates.

 

Global stock markets rose on Thursday, with Wall Street futures mixed, after the Federal Reserve of the United States announced that its key interest rate would remain near zero until 2023, despite rising inflation expectations.

In early trading, London and Frankfurt advanced, while Shanghai, Tokyo, and Hong Kong closed higher. Sydney took a step back.

On Wednesday, Wall Street hit a new high after the Federal Reserve forecasted that the US economy will grow at a rate of 6.5 percent this year, the highest since the 1980s, and that inflation will rise above 2% for the first time in years.

Investors are concerned that if inflation rises, central banks will react by raising interest rates, slowing economic growth. However, comments made by Fed Chairman Jerome Powell at a press conference appeared to reassure them.

In a report, Tai Hui of JP Morgan Asset Management said, “The market reaction suggests investors are satisfied with the Fed’s explanations for the time being.” As inflation rises, he believes the Fed will need to “provide more handholding.”

The FTSE 100 in London rose 0.1 percent to 6,772.41 in early trading, while the DAX in Frankfurt rose 0.6 percent to 14,687.68. The CAC 40 index in Paris rose 0.4 percent to 6,080.36.

On Wall Street, the benchmark S&P 500 index’s futures were down 0.3 percent, while the Dow Jones Industrial Average’s futures were up 0.1 percent.

The S&P 500 gained 0.3 percent on Wednesday, while the Dow gained 0.6 percent. The Nasdaq increased by 0.4 percent.

The Shanghai Composite Index increased 0.5 percent to 3,463.07, while the Nikkei 225 in Tokyo increased 1% to 30,216.75. Hong Kong’s Hang Seng index rose 1.2 percent to 29,384.84.

Seoul’s Kospi rose 0.6 percent to 3,066.01, while Sydney’s S&P-ASX 200 fell 0.7 percent to 6,745.90.

The Sensex in India fell 0.8 percent to 49,401.84. New Zealand’s stock market fell as well, while Southeast Asian markets rose.

After governments flooded their economies with extra spending and credit to reverse the deepest global slump since the 1930s, investors have been concerned that inflation could accelerate.

When there is more pressure on prices to increase, central banks usually respond by raising interest rates. However, Fed officials have stated that they will allow the US economy to “run hot” in order to ensure that the recovery is gaining traction.

The yield on the 10-year US Treasury bond, or the difference between its market price and the payout if held to maturity, had widened to 1.68 percent before his remarks on Wednesday, the highest level since January 2020.

Following Powell’s remarks, yields fell and stocks rose.

The market was helped by banks, industrial stocks, and companies that rely on consumer spending. These gains outweighed a drop in the health-care, utilities, and other industries.

Investors are betting that as spring arrives and more Americans get vaccinated against the coronavirus, the economic downturn will subside. Individuals are benefiting from the $1,400 stimulus checks that the Biden administration began sending out last weekend. However, increased economic activity could lead to inflation.

Unemployment is expected to fall from 6.2 percent to 4.5 percent by the end of the year, and to 3.9 percent by the end of 2022, according to Fed policymakers.

That suggests the central bank will be close to meeting its targets by 2023, when inflation is expected to exceed 2% and unemployment will be at 3.5 percent. Despite this, it does not anticipate a rate increase.

On the New York Mercantile Exchange, benchmark U.S. crude fell 58 cents to $64.02 per barrel in electronic trading. On Wednesday, the contract dropped 20 cents to $64.60. In London, Brent crude, the international standard, dropped 68 cents to $67.32 per barrel. It fell 39 cents to $68 in the previous session.

The dollar rose to 109.17 yen from 108.86 yen on Wednesday. The euro fell from $1.1979 to $1.1953.

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My self Eswar, I am Creative Head at RecentlyHeard. I Will cover informative content related to political and local news from the United Nations and Canada.

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