Global stocks rise after lower US inflation eases rate fears

New Zealand and Southeast Asian markets advanced.Thursdays data reassured investors that US inflation was declining from its June peak of 9.1 per cent, though forecasters said the Feds campaign to cool price rises was far from over.Traders expect the Fed to raise its benchmark lending rate in December but by a smaller margin of half a percentage point following four increases of 0.75 percentage points, triple its usual margin.

Global stock markets rose on Friday after US inflation eased more than had been expected, spurring hopes the Federal Reserve might scale down plans for more interest rate hikes.

Hong Kong's benchmark surged 7.7 percent while Tokyo and Shanghai also gained. London and Frankfurt rose in early trading. Wall Street futures were higher. Oil prices rose more than USD 2 per barrel.

Wall Street's benchmark S&P 500 index rose by its biggest one-day margin in 2 1/2 years on Thursday after the government reported consumer prices rose 7.7 percent over a year ago in October. That was lower than the 8 percent expected by economists and the fourth month of decline.

The announcement "drove a more 'dovish' calibration of interest rate expectations," Yeap Jun Rong of IG said in a report.

The Fed and central banks in Europe and Asia are raising rates to cool inflation that is at multi-decade highs. Investors worry that might tip the global economy into recession. They hope lower inflation might prompt the Fed to ease off plans for more increases.

Forecasters warned on Thursday it was too early to be certain that prices are under control. Fed officials have said rates might have to stay elevated for some time.

In early trading, the FTSE 100 in London gained 0.2 percent to 7,386.00. The DAX in Frankfurt added 0.4 percent to 14,207.27 and the CAC 40 in Paris rose 1.1 percent to 6,627.92.

On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were up 0.7 percent.

On Thursday, the S&P 500 rose 5.5 percent, propelled by big gains for tech heavyweights. Amazon soared 12.2 percent, Apple rose 8.9 percent and Microsoft climbed 8.2 percent.

The Dow Jones Industrial Average gained 3.7 percent, or more than 1,200 points, to 33,715.37.

The Nasdaq composite, dominated by tech stocks, shot up 7.4 percent to 11,114.15 for its best day since March 2020, when Wall Street was rebounding from a crash at the start of the coronavirus pandemic.

In Asia, Hong Kong's Hang Seng index soared to 17,325.66 and the Nikkei 225 in Tokyo gained 3 percent to 28,263.57.

The Shanghai Composite Index added 1.7 percent to 3,078.29 after the ruling Communist Party promised shorter quarantines for travellers arriving in China and other changes to anti-virus tactics to reduce the cost of a severe "zero-COVID" strategy that has disrupted the economy.

The Kospi in Seoul rose 3.4 per cent to 2,483.16 and Sydney's S&P-ASX 200 was up 2.8 per cent at 7,158.00.

India's Sensex gained 1.8 per cent to 61,674.31. New Zealand and Southeast Asian markets advanced.

Thursday's data reassured investors that US inflation was declining from its June peak of 9.1 per cent, though forecasters said the Fed's campaign to cool price rises was far from over.

Traders expect the Fed to raise its benchmark lending rate in December but by a smaller margin of half a percentage point following four increases of 0.75 percentage points, triple its usual margin. That benchmark stands at a range of 3.75 per cent to 4 per cent, up from close to zero in March.

The Fed is trying to slow economic activity to reduce pressure for prices to rise.

The latest figures are a sign the Fed is "on the right path," but it will face "a lot of variables" over the next few quarters, Edward Moya of Oanda said in a report. He said the benchmark rate could be raised to 5 percent and "if inflation proves to be a sticker, it could be as high as 5.50 percent." Core inflation, which strips out volatile food and energy prices and is more closely watched by the Fed, was 6.3 percent over a year earlier, down from September's 6.6 percent and below the consensus forecast of 6.5 percent. Core prices rose 0.3 percent month on month, half of September's 0.6 percent gain.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82 percent from 4.15 percent. The two-year yield, which more closely follows expectations for Fed action, fell to 4.32 percent from 4.62 percent and was on pace for its sharpest fall since 2008.

In energy markets, benchmark US crude gained USD 2.29 to USD 88.76 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 64 cents to USD 86.47 on Thursday.

Brent crude, the price basis for international oil trading, advanced from USD 2.43 to USD 96.10 per barrel in London. It rose from USD 1.02 to USD 93.67 in the previous session.

The dollar declined to 141.44 yen from Thursday's 141.83 yen. The euro rose to USD 1.0233 from USD 1.0180.