Stock market today: Global shares mostly rise after Fed chief’s speech

By YURI KAGEYAMA
AP Business Writer

TOKYO (AP) — Global shares were mostly higher Monday, as investors were relieved by the head of the Federal Reserve indicating it will “proceed carefully” on interest rates.

France’s CAC 40 added 0.8% in early trading to 7,288.58. Germany’s DAX rose 0.6% to 15,730.05. Trading was closed in Britain for a bank holiday.

U.S. shares were set to drift higher with Dow futures up 0.3% at 34,464.00. S&P 500 futures rose 0.2% to 4,423.50.

Japan’s benchmark Nikkei 225 added 1.7% to finish at 32,169.99. Australia’s S&P/ASX 200 gained 0.6% to 7,159.80, after data on Australian retail sales showed they rose a higher than expected 0.5%.

South Korea’s Kospi rose nearly 1.0% to 2,543.41. Hong Kong’s Hang Seng jumped 1.0% to 18,130.74, while the Shanghai Composite surged 1.1% to 3,098.64.

“The muted reaction of treasury yields to the rhetoric from Jackson Hole shows that US Federal Reserve chairman Jerome Powell probably hit the right tone when it comes to keeping further policy tightening on the table but at the same time not rattling market confidence,” said Tim Waterer, chief market analyst at KCM Trade.

In a highly anticipated speech, Powell said Friday that the Federal Reserve will base upcoming interest rate decisions on the latest data about inflation and the economy. He said while inflation has come down from its peak, it’s still too high and the Fed may raise rates again, if needed.

Moody’s Analytics said in a report that prospects for a rapid rebound in Asia was not to be expected, despite signs that “the global electronics cycle has bottomed out,” with chips sales stabilizing.

“The AI boom has boosted demand for high-end chips, but end-user demand for smartphones and PCs remains weak,” said the report authored by senior economics Stefan Angrick and associate economists Dave Chia and Jeemin Bang.

“China’s lackluster recovery and reduced electronics demand from the U.S. and Europe add to the subdued outlook.”

Some market watchers had hoped Powell would say the Fed was done with its hikes to interest rates. Higher rates work to control inflation, but at the cost of slowing the economy and hurting prices for investments.

But Powell also took care to say he’s aware of the risks of going too far on interest rates and doing “unnecessary harm to the economy.” Altogether, the comments weren’t very different from what Powell said before, analysts said.

The Fed has already hiked its main interest rate to the highest level since 2001 in its drive to grind down high inflation. That was up from virtually zero early last year.

The higher rates have sent the manufacturing industry into contraction and helped cause three high-profile U.S. bank failures, while also helping to slow inflation.

In energy trading, benchmark U.S. crude edged up 49 cents to $80.32 a barrel. Brent crude, the international standard, rose 40 cents to $84.88 a barrel.

In currency trading, the U.S. dollar rose to 146.56 Japanese yen from 146.40 yen. The euro cost $1.0801, up from $1.0798.