Global Stocks Rise Post-Fed Decision as Bonds See Fresh Selling

(Shanghai Stock Exchange/Forbes)

(Barron’s) — Global stocks rose on Thursday in their first chance to react to the interest-rate decision in the world’s largest economy, as bond yields spiked higher.

Asian stocks rallied following the Federal Reserve’s decision to keep interest rates at zero and signal there won’t be hikes for at least two years.

“This shows the Fed’s commitment to look through temporary inflation spikes and improving data. This gives us an environment where monetary and fiscal support is fueling a recovering economy and therefore inflation and growth predictions,” said Rony Nehme, chief market analyst at Squared Financial.

The Nikkei 225 rose 1% in Tokyo ahead of Friday’s Bank of Japan decision, and the Hang Seng jumped 1.3% in Hong Kong.

The Stoxx Europe 600 registered smaller gains, of 0.2%, as bond yields started to spike. The yield on the benchmark 10-year Treasury rose as high as 1.73%. Futures on the technology-heavy Nasdaq-100, which is sensitive to rising yields, dropped sharply.

“Price action in USTs continues to validate one of the themes we’ve been flagging for the past few weeks: the market may be short bonds, but it isn’t short enough,” said Stephen Innes, chief global markets strategist at Axi.

Of stocks on the move, vaccine maker SK Bioscience jumped in its trading debut in Seoul. Sartorius, the provider of pharmaceutical and laboratory equipment, jumped 10% in Frankfurt after hiking sales and margin guidance for the year, citing a strong first 10 weeks of 2021.

Automobile maker Volkswagen’s preference shares continued to rise, extending their sharp upward move since a presentation on batteries earlier in the week.

Home-furnishings retailer Williams-Sonoma may advance, after reporting a near doubling of its profit.


Article originally published by Barron’s.

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