Stocks rallied while the dollar slumped against rival currencies on Thursday
after a drop in
US inflation dimmed expectations of more aggressive Federal
Reserve rate hikes.
اضافة اعلان
The consumer price index (CPI), a key measure of inflation, rose at an
annual pace of 7.7 percent in September.
That was below analyst expectations and a dip from the 8.2 percent rate in
September.
The dollar plunged more than three percent against the yen, while the pound
jumped 2.7 percent against the greenback and the euro rose 1.5 percent.
Meanwhile, stocks surged.
On Wall Street, the Dow gained nearly a thousand points in late morning
trading, or 3.0 percent.
The broader S&P 500 jumped 4.5 percent and the tech heavy Nasdaq
Composite soared 5.9 percent.
"Inflation has finally started to drop like a rock in the US and this
is the best news that anyone can expect," said AvaTrade analyst Naeem
Aslam.
"The Fed will still continue to increase the interest rate but there is
no need to be aggressive about this -- which means that the pace of interest
rate hikes will slow down now."
The Fed's main policy rate currently stands at between 3.75 to 4.0 percent,
and investors have been keen on determining when policymakers will
"pivot" away from its aggressive 0.75 percentage point hikes or
"pause" them altogether.
Matt Weller at StoneX said that after the soft inflation reading traders are
now pricing in an 80 percent chance the Fed will shift down to a 0.50 percentage
point interest rate hike and now see rates peaking below 5.0 percent.
"This dovish shift has had an outsized impact on markets," he
said.
"There’s optimism that the worst of the selling may be behind us,"
on equity markets, which are down heavily this year.
- Covid and crypto
-
Markets are grappling also with the impact of strict zero-Covid measures in
China, with supply chains and activity slowed by harsh lockdowns and testing
policies.
"China's domestic demand is weak and their key trading partners are
entering recession territory," said Edward Moya at OANDA trading group.
The crypto world has meanwhile been rocked by a surprise decision from
Binance, the world's biggest cryptocurrency platform, to scrap a possible
acquisition of rival FTX.com a day after disclosing it had signed a non-binding
letter of intent to buy it.
The near-collapse of FTX has plunged bitcoin to a two-year low.
"FTX's slump from over a $32 billion valuation to zero in less than a
few days raises numerous issues," said Stephen Innes at SPI Asset
Management.
"Prominent investors are wearing eggs on their faces after diving in
head first."
He added that gold and silver would be the biggest beneficiaries of the
crypto fallout with investors looking to the trusted precious metals for
stability.
- Key figures
around 1630 GMT -
New York - Dow: UP 3.0 percent at 33,474.29 points
EURO STOXX 50: UP 3.2 percent at 3,846.56
London - FTSE 100: UP 1.1 percent at 7,375.34
Frankfurt - DAX: UP 3.5 percent at 14,146.09
Paris - CAC 40: UP 2.0 percent at 6,556.83
Tokyo - Nikkei 225: DOWN 1.0 percent at 27,446.10 (close)
Hong Kong - Hang Seng Index: DOWN 1.7 percent at 16,081.04 (close)
Shanghai - Composite: DOWN 0.4 percent at 3,036.13 (close)
Euro/dollar: UP at $1.0131 from $1.0017 Wednesday
Pound/dollar: UP at $1.1642 from $1.1352
Dollar/yen: DOWN at 143.15 yen from 146.37 yen
Euro/pound: DOWN at 87.20 pence from 88.19 pence
West Texas Intermediate: UP 1.2 percent at $86.85 per barrel
Brent North Sea crude: UP 1.3 percent at $93.84 per barrel
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