Bulls on the charge after Fed signals smaller hikes ahead
World stocks climb to highest since August
Powell bolsters bets for 50 bps U.S. rate hike this month
Bond markets rally on hopes of lower terminal rates
Dollar sags to lowest since August
China eases some COVID quarantine rules
By Marc Jones
LONDON, Dec 1 (Reuters) - The bulls were enjoying the good life in Europe on Thursday after the world's most influential central banker, Jerome Powell, signalled this year's frantic pace of U.S. interest rate hikes could be about to slow.
It was a textbook 'risk on' pattern, with both the STOXX 600 .STOXX and MSCI's main world stocks index .MIWD00000PUS hitting their highest since August and the previously unstoppable dollar .DXY down at a three-month low.
Rallying bond markets sent borrowing costs lower almost everywhere too , while higher oil and metals prices suggested even commodities markets now hope a less aggressive Federal Reserve will help the spluttering world economy.
"It absolutely makes sense," said Unigestion senior portfolio manager Olivier Marciot, saying it was a case of "it's not so bad any more, so it's good."
"We have the confirmation that we are not having central banks being ever more hawkish and the confirmation that inflation is starting to slow."
There has now been a more than 17% recovery in European and world stocks and a 7.5% fall in the dollar .DXY since the Fed first started to hint at a shift in its view in mid October.
Fed Chair Powell said on Wednesday the U.S. central bank could scale back the pace of interest rates hikes from the recent 75 basis points "as soon as December", though he still cautioned the fight against inflation was far from over.
"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," Powell said in comments that lifted Wall Street's S&P 500 3% .SPX .
Allied with fresh signs that China is looking to relax COVID restriction where it can, Asian stocks jumped 1.35% overnight. .MIAP00000PUS
They posted their biggest monthly gain since 1998 in November as hopes for a Fed pivot towards slower rate hikes gathered steam after four consecutive 75-basis-point increases. But the index was still down about 17.5% on the year.
European markets, meanwhile, largely brushed off German data showing ongoing weak demand in its powerhouse manufacturing sector, helped instead by signs of fewer material shortages perhaps.
The euro was up 0.25% at $1.0432, having traded as high as $1.0463 earlier.
Britain's pound, which has raced back to form over the last couple of months, was up over 0.5% at $1.2124, while a surge from the yen meant the dollar index =USD - which measures the currency against six major peers - dipped a further 0.4%.
"Obviously the speech (by Powell) was less hawkish than feared," said Rodrigo Catril, senior FX strategist at National Australia Bank. "The yen is leading the charge, and that makes sense when you look at the big, big move in long-term U.S. rates."
Markets are currently pricing in a 91% probability that the Fed will increase rates by 50 basis points on Dec. 14, and only a 9% chance of another 75 basis point hike. FEDWATCH
Expectations have also grown around the world that China, while still trying to contain infections, could look to re-open at some point next year once it achieves better vaccination rates among its elderly.
China's factory activity shrank in November as widespread curbs disrupted manufacturers' output, a private sector survey showed on Thursday, weighing on employment and economic growth in the third quarter.
The yield on 10-year Treasury notes US10YT=RR was last down 8.5 basis points to 3.616%, while the two-year US2YT=RR U.S. yield, which typically moves in step with interest rate expectations, was down 3.5 basis points at 4.337%.
Germany's 10 yield, the benchmark for the euro area, dropped 8 basis points to 1.866%. DE10YT=RR The two-year yield fell 7 basis points to 2.075%. DE2YT=RR
Jefferies interest rate strategist Mohit Kumar said: "The market had built in expectations of a hawkish Powell, and he definitely did not deliver".
In commodity markets, gold prices climbed to a two-week high of $1,779.39 an ounce, while oil edged up, supported by signs that OPEC+ may cut supply further at a meeting on Sunday.
Brent crude LCOc1 was up 44 cents, or 0.5%, to $87.41 a barrel by 0930 GMT, while U.S. West Texas Intermediate crude futures CLc1 added 55 cents, or 0.7%, to $81.10.
World FX rates YTD Link
Global asset performance Link
Asian stock markets Link
Additional reporting by Samuel Indyk and Alun Jogn in London
Editing by Mark Potter
Mga Kaugnay na Asset
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.