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World shares climb, dollar falls on relief over Fed's flexible stance

Economy May 26, 2022 05:37PM ET
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2/2 © Reuters. A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying graphs (top) of Nikkei index outside a brokerage in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon 2/2

By Elizabeth Dilts Marshall

NEW YORK (Reuters) - World shares rose on Thursday and the U.S. dollar edged lower, a day after minutes from the U.S. Federal Reserve's May meeting indicated the central bank would remain flexible and might pause rate hikes later in the year.

Wall Street closed higher with the three main U.S. indices positioned for their biggest weekly gains since mid-March.

The MSCI's benchmark for global stocks was up 1.54% at 4:25 p.m. EDT (2025 GMT). Europe's pan-regional STOXX 600 equity benchmark index rose 0.78%, while the MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.02%.

The Dow Jones Industrial Average .DJI rose 516.91 points, or 1.61%, to 32,637.19; the S&P 500 .SPX gained 79.11 points, or 1.99%, to 4,057.84; and the Nasdaq Composite .IXIC added 305.91 points, or 2.68%, to 11,740.65.

The three indexes were on track to snap their longest streak in decades of weekly declines.

The minutes of the Fed's May meeting, released on Wednesday, showed a majority of Fed officials supported the well-telegraphed rate hikes of 50 basis points each in June and July.

Analysts at Bank of America (NYSE:BAC) said the Fed could pause its tightening in September if the economy deteriorates.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell more than expected last week as the labor market remained tight. A separate report confirmed the U.S. economy contracted in the first quarter.

"Jobs data is really going to drive the outlook of the Fed going forward," said Brian Overby, a senior options analyst at Ally. "If they do see the unemployment rate increase a little bit that could slow them down."

The U.S. dollar fell 0.284% against a basket of global currencies. If the Fed gets less aggressive on tightening, that would weaken the greenback's safe-haven appeal.

The euro was up 0.44% to $1.0727.

U.S. Treasury yields edged up after the benchmark 10-year note hit a six-week low, with signs of slower economic growth reducing inflation fears.

The yield on 10-year Treasury notes rose 2.7416% after falling to 2.706% early in the session.

"The 10-year treasury was almost at 3% and has pulled back,” said Clark Kendall, president and CEO of Kendall Capital. "That is an indication that the market feels like the Fed is addressing the inflation problem."

In commodities, Brent futures rose $3.37, or 3.0%, to settle at $117.40 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $3.76, or 3.4%, to settle at $114.09.

U.S. gold futures was last up 0.17% to $1,849.50.

In Asia, Chinese blue chips reversed earlier losses to rise 0.25% after struggling to find direction for most of the session, as investors fretted over signs of a slowdown but took comfort in comments from Premier Li Keqiang on stabilizing the ailing economy.

South Korea's central bank raised interest rates for a second consecutive meeting as it grapples with consumer inflation at 13-year highs.

World shares climb, dollar falls on relief over Fed's flexible stance
 

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Comments (12)
Ac Tektrader
Ac Tektrader May 26, 2022 4:42PM ET
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inflationary pressure should start to subside by this fall. when you consider pre covid-19 demand this kind of inflation is being caused by bottle necks in the supply chain, not excessive demand.
Plyler McManus
Plyler McManus May 26, 2022 4:41PM ET
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What a bunch of BS. Powell's post meeting commentary was very clear and the minutes change nothing yet the article indicates relief is in order. The real truth is they have no idea why the market is up today.
Ac Tektrader
Ac Tektrader May 26, 2022 4:36PM ET
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there a better than even chance this bear market could last into march 2023.
Martijn WN
Speculeerbeer May 26, 2022 4:36PM ET
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Plenty of time to load up until then
David Beckham
David Beckham May 26, 2022 11:43AM ET
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And we never know what the inflation in the next two month. But we all know it’s still above 8% now
David Beckham
David Beckham May 26, 2022 11:41AM ET
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It’s funny to say it gradual when they will raise 50 in the next two meeting and start qt in june
King Kingz
King Kingz May 26, 2022 7:24AM ET
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information is information, how you use it is where the power lies.
The Secrete of Millionaires USA
The Secrete of Millionaires USA May 26, 2022 7:18AM ET
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news always give wrong info. to mislead trader. trade on opposite direction
jason xx
jason xx May 26, 2022 5:25AM ET
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Doom Gloom and don't forget more doom
Ramesh Shah
Ramesh Shah May 26, 2022 2:33AM ET
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Jobs being lost in small businesses worldwide and cud lead to big slowdown as Energy prices are high
Erikke Evans
Erikke May 26, 2022 1:49AM ET
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worldwide recession
 
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