World stock markets extend gains on Fed optimism

LONDON: Global stocks rose further Thursday as Federal Reserve boss Jerome Powell flagged a moderation in interest rate hikes, while China signalled a soter approach to fighting Covid.

Asian and European equities tacked higher as investors also eyed news that eurozone unemployment plumbed to a record-low 6.5 per cent in October.

Oil prices climbed before this weekend’s OPEC output meeting of key crude producing nations.

“Powell... signalled a potential slowing of interest rate hikes,” noted equity analyst Mat Britzman at UK stockbroker Hargreaves Lansdown.

“Markets have been clinging to every scrap of positive news lately and this was a continuation of that trend.” In a much-anticipated speech Wednesday, Powell said the full effects of the Fed’s belt-tightening had yet to be felt but that it “makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down”.

He signalled the US central bank’s December gathering would likely see officials lit borrowing costs by 50 basis points.

The Fed has yanked up rates by a bumper 75 points at each of the last four meetings.

However, Powell did say policy would need to remain tight “for some time” to restore price stability, echoing comments from other Fed officials who suggested there might not be any cuts until 2024.

Analysts said the reaction to Powell’s remarks -- which had been expected to be his most dovish in some time -- highlighted a sense of relief among investors that a long-hoped-for pivot was on the cards.