The sharp turnaround of the Federal Reserve System due to the prospect of further increases in interest rates helped global stocks achieve the best in nearly three years of the month.
Asian stocks showed the largest increase on Thursday, reflecting a more than 1.5 percent jump on Wall Street yesterday after politicians said they would be patient in assessing the prospects for monetary policy and that they are open to changing the speed with which central bank multimillion-dollar stocks of US government bonds were dismantled.
That was enough to convince investors that the Fed, which in December predicted two further rate hikes this year and worked hard to unwind the eaisng quantitative policy that has plunged trillions of dollars into the US economy after the financial crisis, is ready to expand. ten-year position of easy money.
“We’re actually very excited about this new tone in the Fed’s language, because we insisted on a pause to raise rates even to the horrible fourth quarter of 2018 for the markets,” said Rick Rieder, head of fixed income division at BlackRock.
The change of the Fed helped to consolidate the staggering growth of global stocks in January, which led to a sharp reversal of the December almost collapse of stocks. FTSE All World, a broad benchmark for global stocks, climbed 7.2 percent in January and is approaching its best month since March 2016. After falling almost 10 percent in December, the S & P 500 rose 7 percent in the best month since October 2015.
The Fed cited slowing growth in major markets, including China, and heightening geopolitical uncertainty, including trade tensions and Brexit, for its dramatic shift that was a relief for those, including President Donald Trump, who captured Mr. Powell. optimistic about the outlook.
Michael Feroli, an American economist at JPMorgan Chase, said he could not recall such a big change in direction from the Fed without a significant change in the economic background. Harm Bandholz, chief US economist at UniCredit, said the changes in the Fed's monetary policy statement gave traders and investors everything they could hope for.
On Thursday, there was a surge in stock markets in Asia: the Japanese Topix index and the Hong Kong Hang Seng index rose by about 1%. The CSI 300 index in mainland China also grew by more than 1 percent. Impulse in Europe began to decline when the Frankfurt Xetra Dax 30 returned to the flat line, failing to keep the initial growth of 0.7%. The regional Stoxx 600 was also flat.
The prospect of an earlier end to the tightening of the monetary policy of the Fed caused a rally in sovereign bonds, when the yield on two-year Treasury bonds fell below 2.5% for the first time in three weeks. The yield on the 10-year treasury fell to the base point to 2.67 percent.
Meanwhile, the dollar weakened in all directions, the yuan reached a six-month high. The cost of the yuan on land increased by 0.2 percent, which is enough to fix the strongest calendar month of the year, which is 2.5 percent against the US dollar in January.
On Wall Street futures point to a 0.1 percent increase in the S & P 500 index on Thursday.
Tai Hui, chief market strategist for the Asia-Pacific region at JPMorgan Asset Management, said the Fed's statement about keeping stakes in a stalemate "removed one of two obstacles to the growth of risky assets in Asia and in emerging markets."
The remaining obstacle is the trade tension between China and the United States, which he called "much more complicated." The Fed statement should also ease concerns about the rising cost of financing for emerging market companies that borrowed in US dollars, he added.
Currently, the focus is on trade negotiations between the United States and China. Donald Trump should meet with Liu He, China’s vice premier, at the end of the high-level talks this week to step up pressure on Beijing to make concessions to economic reforms that could end the tariff war.
ING analysts say that US negotiators increasingly insist on fundamental changes in China’s industrial policy “Made in China until 2025”, as well as on more transparent foreign exchange transactions and the value of the yuan.
Mr. Trump earlier this year tweeted to criticize “China, the EU and others [for] manipulating their currencies and interest rates below. "