World stock markets powered higher Thursday, sweeping aside worries about a flagging global economy after the U.S. Federal Reserve said it would remain “patient” in its approach to raising interest rates.
France’s CAC 40 jumped 2.2 per cent to 4,200.83 and Germany’s DAX surged 1.9 per cent to 9,727.83. Britain’s FTSE 100 added 0.7 per cent to 6,383.25. Wall Street was poised to extend Wednesday’s gains. Dow futures climbed 0.8 per cent to 17,423 and S&P 500 futures rose 0.8 per cent to 2,024.60.
The world’s most powerful central bank is edging closer to raising interest rates from record lows given a strengthening U.S. economy. But it will be “patient” in deciding when to do so. That was the message sent Wednesday as the Fed ended a meeting amid heightened expectation about a forthcoming rate increase. At a news conference, Chair Janet Yellen said she foresaw no rate hike in the first quarter of 2015.
“With a week to go to Christmas, Santa seems to have finally arrived for global equities,” said Stan Shamu, market strategist at IG in Melbourne, Australia. “It was always important for the Fed to get the language right so as not to spook markets at such a fragile time and it seems it has done just that.”
Japan’s Nikkei 225 catapulted 2.3 per cent to 17,210.05 and Hong Kong’s Hang Seng added 1.1 per cent to 22,832.21. Australia’s S&P/ASX 200 rose 1 per cent to 5,210.80. Markets in Taiwan, India and Southeast Asia also gained. China’s Shanghai Composite fell 0.1 per cent to 3,057.52. Seoul’s Kospi was down 0.1 per cent at 1,897.50.
Russia remained in focus over concerns about the impact of the recent slide in the ruble. The currency has lost more than 50 per cent of its value this year as the oil price slump and Western sanctions over Russia’s actions in Ukraine hit the Russian economy. After falling again Wednesday, the ruble remained volatile but recovered somewhat and was at 61.90 to the dollar.
Benchmark U.S. crude was up 93 cents at $57.40 a barrel in electronic trading on the New York Mercantile Exchange. In Wednesday’s Nymex floor trading, it closed up 54 cents to $56.47 a barrel. Oil has been on a wild downhill ride since June when it was over $100 a barrel. Overproduction and weak demand are behind the fall in global oil prices. Brent crude, a benchmark for international oils, jumped $2.67 to $62.66 a barrel.
The euro fell to $1.2314 from the previous day’s closing level of $1.2329. The dollar fell to 118.63 yen from 118.83 yen.