On Thursday, upbeat German economic data and gains in mega-cap growth stocks in the US give a lift to an index of global shares.
Meanwhile, there was a fall in US Treasury yields, as investors were waiting for the speech of Jerome Powell on Friday to look for hints about the Federal Reserve’s plans for combating inflation.
Powell in focus
The annual monetary policy conference of the Federal Reserve is scheduled to begin on Thursday in Wyoming, while the chairman is scheduled to give a speech on Friday.
The focus is on what Jerome Powell will say in his speech, as investors will be searching for clues about the pace of the interest rate hikes and how long they will continue if inflation does not come down.
Market analysts said that this time period was between the end of the corporate earnings season and the release of meaningful data from the US Fed.
They said that volatility in the markets was at a low level, but they were certainly churning for a bit.
Economic data
Germany is the largest economy in Europe and its GDP data showed that it managed to avoid a contraction in the second quarter, albeit narrowly.
Moreover, investor confidence also turned out to be better than expected and this helped boost appetite, thereby lifting the euro above parity against the dollar for a brief period.
However, by the time the minutes of the European Central Bank’s meeting were released, the euro had gone below $1 once more.
The meeting is where the ECB hiked its interest rates for the first time by 50 basis points in more than a decade and the minutes showed policymakers worried about inflation getting entrenched in the economy.
Index performance
There was a 1.26% rise in the MSCI’s index of global shares, thanks to the rise on Wall Street. A 0.98% gain was recorded in the Dow Jones Industrial Average, or 322.55 points, which saw it reach 33,291.78.
A 1.41% increase in the S&P 500 index saw it go up by 58.35 points to reach 4,199.12, while a 1.67% gain in the Nasdaq Composite saw it climb by 207.74 points to hit 12,639.27.
There was also a 0.30% gain in the continent-wide STOXX 600 index in Europe. After climbing to multi-week highs in the last session, there was a decline in US Treasury yields on Thursday.
This was because investors were balancing their positions due to uncertainty surrounding the Fed chair’s speech on Friday.
Market analysts said that most of the heavy lifting for a hike of 75 basis points had already been done by the bond market.
Therefore, the possibility of the Fed not opting for three-quarters of a percentage point hike was a big risk.
This is because if they slow down and inflation continues to be persistent, then it would be difficult to go back to being restrictive.
There was a decline in 10-year government bond yields by 6.7 basis points, as they reached 3.037%.