Global equity markets rise after Powell speech

Published: August 25, 2018 12:40:40 | Updated: August 27, 2018 16:00:26


Global equity markets rose on Friday after Federal Reserve Chairman Jerome Powell expressed no surprises in a key speech outlining a steady course for monetary policy.

Oil prices surged on signs Iran sanctions may constrain worldwide supply. The benchmark S&P 500 and the Nasdaq hit all-time highs after Powell’s comments.

The dollar weakened. The index fell 0.58 per cent, while the euro and Japanese yen rose against the greenback, reports Reuters.

MSCI’s gauge of stocks across the globe gained 0.55 per cent while it’s emerging market index rose 0.33 per cent.

The energy sector jumped 1.19 per cent, the most among the 11 S&P sectors. The materials sector gained 1.41 per cent.

In Europe, the pan-European FTSEurofirst 300 index of regional shares closed up a preliminary 0.12 per cent.

On Wall Street, the Dow Jones Industrial Average rose 139.04 points, or 0.54 per cent, to 25,796.02. The S&P 500 gained 16.57 points, or 0.58 per cent, to 2,873.55 and the Nasdaq Composite added 66.29 points, or 0.84 percent, to 7,944.75.

US Treasury prices gave back earlier losses after Powell made the case for further rate increases.

Benchmark 10-year US Treasury notes fell 2/32 in price to yield 2.828 per cent, after rising to 2.850 per cent before Powell’s speech.

The yield curve between two-year and 10-year notes narrowed to 20 basis points, the flattest since 2007. An inverted yield curve in the past has pointed to a recession will occur within two years.

Oil prices surged, rising almost 2.0 per cent, on signs that Iran sanctions may limit global supply and that a trade war may not curb China’s appetite for US crude.

Benchmark Brent crude oil rose $1.45 a barrel to $76.18. US crude gained $1.31 at $69.14.

The euro rose 0.72 per cent to $1.162 while the Japanese yen strengthened 0.05 per cent versus the greenback at 111.25 per dollar.

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