Stocks rise as investors put aside rate hike fears
The Dow Jones Industrial Average rose 296.97 points, or 0.84 percent, to 35,759.75, the S&P 500 gained 53.4 points, or 1.18 percent, to 4,574.94 and the Nasdaq Composite added 195.32 points, or 1.38 percent, to 14,389.77 by 10:40 a.m. EST (1540 GMT)
World stocks rallied on Wednesday, with Wall Street rising again on a Big Tech boost and European shares gaining on strong earnings as investors put aside worries about rising interest rates for now.
Major U.S. stock indexes kicked off the session with gains as high-growth stocks continued their recent rally.
The Dow Jones Industrial Average rose 296.97 points, or 0.84 percent, to 35,759.75, the S&P 500 gained 53.4 points, or 1.18 percent, to 4,574.94 and the Nasdaq Composite added 195.32 points, or 1.38 percent, to 14,389.77 by 10:40 a.m. EST (1540 GMT).
The pan-European STOXX 600 climbed 1.8%, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.8% to a more than two-week high and the blue-chip Nikkei closed just over 1% higher.
Investors also took comfort in positive news headlines over recent days suggesting tensions between the West and Russia over Ukraine may be easing and a string of upbeat earnings lifted sentiment towards risk assets.
French President Emmanuel Macron, who met Russian President Vladimir Putin on Monday, said on Tuesday he believed steps can be taken to de-escalate the crisis in which Russia has massed troops near Ukraine but says it does not plan an attack.
On the earnings front, French fund manager Amundi on Wednesday posted a strong rise in earnings, quarterly results from British drugmaker GSK beat forecasts and Dutch bank ABN Amro reported a higher-than-expected net profit of 552 million euros for the fourth quarter.
“Last few days have seen positive headlines over Russia/Ukraine with negotiations between Macron and Putin and reports of German efforts to deescalate the crisis,” said Mohit Kumar, managing director, interest rates strategy, Jefferies.
“But we retain our view that a greater concern for risky assets is a removal of central bank accommodation as markets have become used to abundant liquidity and low rates for a long period of time.”
Major central banks have turned more hawkish in the face of stickier than anticipated inflation, sending bond yields higher.
The European Central Bank could raise rates this year, new Bundesbank President Joachim Nagel said in a newspaper interview.
Barring any big surprises, Thursday’s U.S. consumer price index meanwhile should cement expectations the Federal Reserve will raise rates next month, with a strong print offering further support to those tipping a larger 50 basis point rise.
Japan’s 10-year bond yield pulled back from a session peak of 0.215%, its highest since January 2016. But after sharp selling, broader bond markets stabilised with prices rising and yields falling.