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ECB raises rates to two decade high of 3.5% as expected
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Fed signals two more rate hikes before end of year
By Sinéad Carew and Marc Jones
NEW YORK, LONDON June 15 (Reuters) – MSCI’s global index of stocks advanced on Thursday, hitting its highest level since April 2022, and the dollar lost ground to the euro after the European Central Bank (ECB) raised interest rates and the Federal Reserve paused its hikes but signaled there would be more coming.
The euro hit a 15-year peak against the yen and a fresh four-week high against the dollar after the ECB lifted interest rates to a two-decade high of 3.5% and guide to more hikes ahead.
Equity trading has been choppy since the U.S. Fed on Wednesday delivered a signal that it could follow its June hiking pause with two more rate increases this year.
While equities initially sold off after that decision, they had mostly regained their lost ground by Wednesday’s close to trade higher Thursday as investors digested the news.
“Markets continue to bet against the Fed. They’re betting that it’s done hiking rates and that this pause will turn into a cut over the next six months,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management in Elmhurst, Illinois.
The Dow Jones Industrial Average rose 220.46 points, or 0.65%, to 34,199.79; the S&P 500 gained 18.94 points, or 0.43%, to 4,391.53; and the Nasdaq Composite added 46.46 points, or 0.34%, to 13,672.94.
The pan-European STOXX 600 index lost 0.25% and MSCI’s gauge of stocks across the globe gained 0.40%.
In currencies, the dollar index, which measures the greenback against a basket of major currencies, fell 0.534%, with the euro up 0.74% to $1.0911, hitting its highest point against the dollar in more than a month.
The Japanese yen weakened 0.18% versus the greenback at 140.32 per dollar, while sterling was last trading at $1.2745, up 0.66% on the day.
U.S. Treasury yields were lower on Thursday as investors digested a flurry of economic data and the repercussions from the Fed policy updates.
Benchmark 10-year notes were down 7.8 basis points to 3.720%, from 3.798% late on Wednesday. The 30-year bond was last down 6.2 basis points to yield 3.8186%, from 3.881%. The 2-year note was last was down 5.9 basis points to yield 4.6481%, from 4.707%.
In commodities, oil prices rose as the dollar weakened and data showed a jump in refinery runs in top crude importer China, though a weak economic backdrop capped gains.
U.S. crude was last up 1.77% to $69.48 per barrel and Brent was at $74.43, up 1.68% on the day.
Gold prices rose from a three-month low as the dollar and bond yields fell after U.S. economic data, although worries over more Fed rate hikes capped gains.
Spot gold added 0.6% to $1,954.21 an ounce. U.S. gold futures fell 0.15% to $1,952.40 an ounce.
(Additional reporting by Sinéad Carew in New York, Marc Jones in London, Tom Westbrook in Singapore; Editing by Mark Potter and Alexander Smith)