Stocks Gain After Fed Ends Stimulus 10/30 06:21
World stock markets mostly rose Thursday, taking in stride the Federal
Reserve's announcement it will end a stimulus program that was as massive as it
was controversial. The dollar strengthened after the U.S. central bank hinted
at an eventual interest rate hike.
HONG KONG (AP) -- World stock markets mostly rose Thursday, taking in stride
the Federal Reserve's announcement it will end a stimulus program that was as
massive as it was controversial. The dollar strengthened after the U.S. central
bank hinted at an eventual interest rate hike.
KEEPING SCORE: In early European trading, France's CAC 40 rose 0.9 percent
to 4,146.39 and Germany's DAX gained 0.6 percent to 9,132.53. Britain's FTSE
100 added 0.3 percent to 6,470.74. U.S. stocks were poised to open higher, with
Dow futures rising 0.1 percent to 16,943. S&P 500 futures advanced 0.1 percent
STIMULUS OVER: The Fed confirmed the end of its $4 trillion bond-buying
program, the effect of which has been to expand the money supply, noting that
the U.S. economy no longer needs as much assistance. Markets have been through
several episodes of jitters about the program's withdrawal because the low
interest rates and ample liquidity it engendered have provided significant
support to stocks even as experts debated whether it was helping the U.S.
economy. But the focus now is on when the interest rates will rise from record
low levels. The Fed reiterated that "considerable time" was needed before
short-term borrowing rates are raised from near zero. It also noted the
improving job market in the world's biggest economy, signaling that an eventual
interest rate hike is on the cards.
THE QUOTE: "While 'considerable time' was kept, the Fed also inserted an
escape clause, citing that it might raise rates sooner than anticipated if
progress is faster than expected, and vice-versa. Thus, markets began to bring
back pricing of the first rate hike back to June, and the U.S. dollar also
rallied across the board," Mizuho Bank's Chang Wei Liang said in a research
ASIA'S DAY: Japan's Nikkei 225 rose 0.7 percent to close at 15,658.20 while
South Korea's Kospi lost 0.1 percent to 1,958.93. Hong Kong's Hang Seng fell
0.5 percent to 23,702.04. In mainland China, the Shanghai Composite Index rose
0.8 percent to 2,391.08. Australia's S&P/ASX 200 climbed 0.5 percent to
LOOKING AHEAD: Investors are awaiting a raft of economic data from the U.S
and Europe over the next few days, including an estimate for U.S. third-quarter
growth later Thursday. Analysts expect an annual rate of 3 percent, which would
be the fourth quarter in five that it has expanded at that speed or higher.
CURRENCIES: The dollar rose to 109.25 yen from 108.77 in late trading
Thursday. The euro slipped to $1.2572 from $1.2639.
ENERGY: Benchmark crude oil dropped 67 cents to $81.51 in electronic trading
on the New York Mercantile Exchange. The contract rose 78 cents to settle at
$82.20 on Wednesday. Brent crude, used to price oil in international markets,
slipped 75 cents to $86.36 in London.