Stocks rally with Fed closer to tapering emergency support

Stock markets rallied strongly Thursday after the Federal Reserve moved closer to unwinding its huge emergency stimulus.

Equities have won back ground from last week’s sharp falls thanks also to easing concerns over troubled Chinese property giant Evergrande.

Stocks had tumbled over fears that the group could collapse, leading to possible contagion around the world.

Ratings agency Fitch on Thursday cut its growth forecast for China’s economy this year, citing a slowdown in the country’s colossal property sector.

But focus remained firmly on central banks, with the Bank of England keeping rates and stimulus measures in place at its own meeting Thursday.

“Debt contagion concerns out of China continue to ease, while the markets appear to remain constructive regarding yesterday’s Fed monetary policy decision,” Charles Schwab analysts wrote.

The Fed on Wednesday said it expects to “soon” be ready to start tapering stimulus put in place at the start of the pandemic via bond purchases — a key driver of the global economic and equity rebound.

On Wall Street the Down Jones Industrial Average and tech-heavy Nasdaq both rose in morning trading, while the dollar weakened on profit-taking.

And in Europe markets mostly rose, although the London index was flat, while the pound also gained.

Early business activity data for the region show “manufacturing and services sector growth in both the UK and Eurozone slowing but remaining comfortably in expansion territory,” Schwab said.

Nevertheless, “the Delta variant (of coronavirus) and supply chain challenges continue to fester”.

Fed chief Jerome Powell warned US lawmakers to lift the country’s debt ceiling to avoid the government running out of cash and failing to service its debt obligations, which could lead to a default and spark a financial crisis.

In Asia, Hong Kong closed up more than one percent, with Evergrande’s share price surging by around one-quarter.

– Key figures around 1530 GMT –

New York – Dow: UP 1.5 percent at 34,785.75 points

London – FTSE 100: DOWN less than 0.1 percent at 7,078.35

Frankfurt – DAX: UP 0.9 percent at 15,643.97

Paris – CAC 40: UP 1.0 percent at 6,701.98

EURO STOXX 50: UP 1.1 percent at 4,194.92

Hong Kong – Hang Seng Index: UP 1.2 percent at 24,510.98 (close)

Shanghai – Composite: UP 0.4 percent at 3,642.22 (close)

Tokyo – Nikkei 225: Closed for a holiday

Euro/dollar: UP at $1.1737 from $1.1696 at 2100 GMT

Pound/dollar: UP at $1.3741 from $1.3620

Euro/pound: DOWN at 85.42 pence from 85.84 pence

Dollar/yen: UP at 110.19 yen from 109.80 yen

Brent North Sea crude: UP 1.3 percent at $77.20 per barrel

West Texas Intermediate: UP 1.7 percent at $73.45 per barrel

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