World stocks recover from sell-off and US treasury yields rise on Fed comment
US Fed chairman Jerome Powell repeats the case for gradual rate hikes; the euro stays lower against the dollar after comments by ECB’s Mario Draghi
New York — Stocks on world markets edged higher on Wednesday, recovering from a recent sell-off on rapidly escalating China-US trade tensions, while US treasury yields rose after the US Federal Reserve chairman said it should continue with a gradual pace of interest rate increases.
US Fed chairman Jerome Powell said the pace should stay the same given that the labour market does not seem to be overly tight.
The S&P 500 edged higher along with the Nasdaq, with tech shares providing support. Boeing also rose after selling off on trade war worries the day before.
"A lot of people believe the track that the [US] president is taking is a negotiation tactic, and the people who still think the trade war will develop, believe it would be China that comes to the table with concessions first," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth in New York.
The Dow Jones Industrial Average erased its year-to-date gains on Tuesday after US President Donald Trump’s latest tariff threats against Chinese goods.
The Dow Jones Industrial Average fell 44.72 points, or 0.18%, to 24,655.49; the S&P 500 gained 6.34 points, or 0.23%, to 2,768.93; and the Nasdaq Composite added 55.39 points, or 0.72%, to 7,780.97.
The pan-European FTSEurofirst 300 index rose 0.46% and MSCI’s gauge of stocks across the globe gained 0.41%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.72% higher, while shares in Hong Kong, Seoul and mainland Chinese indices also rose.
Helping those shares was a state radio report saying that China will use targeted cuts in banks’ reserve requirement ratios and other monetary policy tools to boost credit for small firms.
Powell’s comments boosted yields in the US treasury market. Benchmark 10-year notes last fell 5/32 in price to yield 2.9114%, from 2.893% late on Tuesday. Before Powell’s remarks, US yields had been little changed.
The euro held slim losses against the dollar as European Central Bank (ECB) president Mario Draghi said the factors holding back local wages are subsiding and the ECB is confident inflation in the eurozone would move toward its 2% goal. The dollar index fell 0.09%, with the euro down 0.03% to $1.1585.
In commodities markets, copper prices eased again after an inventory rise highlighted healthy supplies, extending declines from Tuesday tied to trade-war worries. Copper lost 0.94% to $6,776.00 a tonne.
US crude rose 1.63% to $66.13 a barrel and Brent was last at $75.19, up 0.15%.