US stock futures rose and bond yields fell on Thursday after the Federal Reserve signaled it may be on the verge of suspending interest rate hikes.
“It has calmed down a bit. A big part of that is that the Fed has signaled they’re almost done,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.
Fed Chair Jerome Powell said on Wednesday that officials were considering skipping a rate hike after bank stress intensified last week. He hinted that Wednesday’s hike could be the last for now, depending on the extent of any lending pullback.
A host of other monetary authorities followed the Fed’s lead on Thursday, including central banks in the UK, Switzerland and Norway, which hiked rates. The Bank of England’s quarter-point rise was in line with market expectations after this week’s hot inflation data.
“It’s not surprising given the inflation data we had,” said Jorge Garayo, fixed income strategist at Société Générale. Mr Garayo said the BOE’s tone on possible future rate hikes had also become tougher: “It’s a bit more hawkish, but that’s to be expected,” he said.
In recent market actions:
- Index futures rose. S&P 500 futures rose 0.4%, a day after the broad market index lost 1.6%. Nasdaq 100 futures rose 0.8%, signaling gains for technology stocks after the opening bell.
- Stocks have whipped up over the past few days, as central banks took steps to contain instability in the banking sector while tackling inflation. The S&P 500 has moved more than 1% in nine trading sessions so far in March.
- Bond yields fell. The 10-year Treasury yield extended its decline into a second day, falling to 3.485% from 3.497%.
- Market prices show that investors expect the Fed to cut interest rates weigh on bond yields in the coming months.
- The British pound strengthened a 0.6% appreciation against the dollar following the BOE decision.
- In Asia, Hong Kong’s Hang Seng index rose 2.3%, lifted by strong gains from Tencent. The Chinese tech giant reported a turnaround in revenue growth, sending its shares up 8%.