Stock markets rally after jumbo US rate cut
The seal of the Board of Governors of the Federal Reserve System is seen ahead of a press conference by US Federal Reserve Chairman Jerome Powell after a Federal Open Market Committee meeting at the Federal Reserve in Washington, DC, on September 18, 2024. (Photo by Mandel NGAN / AFP)
New York, United States — Global stock markets rallied Thursday, with major US indices surging to all-time highs after the Federal Reserve delivered a bumper interest-rate cut and pledged further reductions.
READ: PSEi highest in more than 2 years after surprise Fed move
The Fed on Wednesday cut its key lending rate by half a percentage point, opting for the larger reduction after also weighing a quarter-point move.
The aggressive cut split opinion among analysts, with some warning it could reignite inflation, while others said it showed the bank was keeping ahead of the curve in supporting the economy.
Among other markets, Frankfurt closed with a 1.6 percent gain and a record close of 19,002.38 points after setting a record session high of 19,044.96
Paris ended up 2.3 percent after its strongest session since January.
London’s FTSE 100 index closed up 0.9 percent, paring back some gains after the Bank of England held its own rate steady at five percent.
READ: Federal Reserve signals end to inflation fight with half-point rate cut
The decision was expected, avoiding a second reduction in a row after the Bank of England delivered its first cut in August.
BoE governor Andrew Bailey said the central bank needed “to be careful not to cut too fast or by too much,” as UK inflation stays above its target.
The pound hit a more than two-year high against the dollar before easing back.
Tokyo and Hong Kong closed around two percent higher.
Fawad Razaqzada, market analyst at City Index and FOREX.com, said the half-point US cut was being “seen as a bold but necessary step to ease economic concerns without sending panic signals reminiscent of the 2008 financial crisis.”
Norway’s central bank also opted to keep its policy rate unchanged, holding it at a 16-year high and warning that the first cut would only come in the first quarter of 2025.
Key figures around 2030 GMT
New York – Dow: UP 1.3 percent at 42,025.19 (close)
New York – S&P 500: UP 1.7 percent at 5,713.64 (close)
New York – Nasdaq Composite: UP 2.5 percent at 18,013.98 (close)
London – FTSE 100: UP 0.9 percent at 8,328.72 (close)
Paris – CAC 40: UP 2.3 percent at 7,615.41 (close)
Frankfurt – DAX: UP 1.6 percent at 19,002.38 (close)
Tokyo – Nikkei 225: UP 2.1 percent at 37,155.33 (close)
Hong Kong – Hang Seng Index: UP 2.0 percent at 18,013.16 (close)
Shanghai – Composite: UP 0.7 percent at 2,736.02 (close)
Pound/dollar: UP at $1.3281 from $1.3214 on Wednesday
Euro/dollar: UP at $1.1161 from $1.1119
Dollar/yen: UP at 142.57 yen from 142.29 yen
Euro/pound: DOWN at 84.03 pence from 84.14 pence
Brent North Sea Crude: UP 1.7 percent at $74.88 per barrel
West Texas Intermediate: UP 1.5 percent at $71.95 per barrel
