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Global stock markets rose on Friday after US inflation eased more than had been expected, spurring hopes the Federal Reserve might scale down plans for more interest rate hikes.
Hong Kong's benchmark surged 7.7 per cent while Tokyo and Shanghai also gained. London and Frankfurt rose in early trading. Wall Street futures were higher. Oil prices rose more than USD 2 per barrel.
Wall Street's benchmark S&P 500 index rose by its biggest one-day margin in 2 1/2 years on Thursday after the government reported consumer prices rose 7.7 per cent over a year ago in October. That was lower than the 8 per cent expected by economists and the fourth month of decline.
The announcement drove a more 'dovish' calibration of interest rate expectations, Yeap Jun Rong of IG said in a report.
The Fed and central banks in Europe and Asia are raising rates to cool inflation that is at multi-decade highs. Investors worry that might tip the global economy into recession. They hope lower inflation might prompt the Fed to ease off plans for more increases.
Forecasters warned on Thursday it was too early to be certain that prices are under control. Fed officials have said rates might have to stay elevated for some time.
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In early trading, the FTSE 100 in London gained 0.2 per cent to 7,386.00. The DAX in Frankfurt added 0.4 per cent to 14,207.27 and the CAC 40 in Paris rose 1.1 per cent to 6,627.92.
On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were up 0.7 per cent.
On Thursday, the S&P 500 rose 5.5 per cent, propelled by big gains for tech heavyweights. Amazon soared 12.2 per cent, Apple rose 8.9 per cent and Microsoft climbed 8.2 per cent.
The Dow Jones Industrial Average gained 3.7 per cent, or more than 1,200 points, to 33,715.37.
The Nasdaq composite, dominated by tech stocks, shot up 7.4 per cent to 11,114.15 for its best day since March 2020, when Wall Street was rebounding from a crash at the start of the coronavirus pandemic.
In Asia, Hong Kong's Hang Seng index soared to 17,325.66 and the Nikkei 225 in Tokyo gained 3 per cent to 28,263.57.
The Shanghai Composite Index added 1.7 per cent to 3,078.29 after the ruling Communist Party promised shorter quarantines for travellers arriving in China and other changes to anti-virus tactics to reduce the cost of a severe zero-COVID strategy that has disrupted the economy.
The Kospi in Seoul rose 3.4 per cent to 2,483.16 and Sydney's S&P-ASX 200 was up 2.8 per cent at 7,158.00.
India's Sensex gained 1.8 per cent to 61,674.31. New Zealand and Southeast Asian markets advanced.
Thursday's data reassured investors that US inflation was declining from its June peak of 9.1 per cent, though forecasters said the Fed's campaign to cool price rises was far from over.
Traders expect the Fed to raise its benchmark lending rate in December but by a smaller margin of half a percentage point following four increases of 0.75 percentage points, triple its usual margin. That benchmark stands at a range of 3.75 per cent to 4 per cent, up from close to zero in March.
The Fed is trying to slow economic activity to reduce pressure for prices to rise.
The latest figures are a sign the Fed is on the right path, but it will face a lot of variables over the next few quarters, Edward Moya of Oanda said in a report. He said the benchmark rate could be raised to 5 per cent and if inflation proves to be sticker, it could be as high as 5.50 per cent.
Core inflation, which strips out volatile food and energy prices and is more closely watched by the Fed, was 6.3 per cent over a year earlier, down from September's 6.6 per cent and below the consensus forecast of 6.5 per cent. Core prices rose 0.3 per cent month on month, half of September's 0.6 per cent gain.
The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82 per cent from 4.15 per cent. The two-year yield, which more closely follows expectations for Fed action, fell to 4.32 per cent from 4.62 per cent and was on pace for its sharpest fall since 2008.
In energy markets, benchmark US crude gained USD 2.29 to USD 88.76 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 64 cents to USD 86.47 on Thursday.
Brent crude, the price basis for international oil trading, advanced USD 2.43 to USD 96.10 per barrel in London. It rose USD 1.02 to USD 93.67 the previous session.
The dollar declined to 141.44 yen from Thursday's 141.83 yen. The euro rose to USD 1.0233 from USD 1.0180.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
