Nasdaq hits record high as Wall Street rally continues
US stocks rose today as the Nasdaq hit a record high after Fed officials calmed fears of a sharp tapering of monetary stimulus.
The Dow Jones Industrial Average and the benchmark S&P 500 both gained 0.1 per cent at the open.
Meanwhile, the tech-heavy Nasdaq advanced by 0.2 per cent to open at a record high.
In a hearing last night, Fed Chair Jerome Powell affirmed that the central bank will not raise interest rates too quickly on inflation fears alone.
Powell added that the Fed will encourage a “broad and inclusive” recovery of the jobs market.
The central bank’s comments follow its projection of an increase in interest rates as soon as 2023, which triggered a move into tech-heavy growth names.
However, market participants have swung between value and growth stocks this week, with the Nasdaq hitting a record high today.
“Powell has planted a seed of tapering, the Fed is paving a way for more discussions around tapering itself and that, coupled with where they talk about rates next time, is going to build some volatility into markets,” said Johan Grahn, vice president of AllianzIM.
London markets
London’s FTSE 100 rose today as heavyweight mining and travel stocks offset a slide in homebuilders.
The blue-chips were trading 0.5 per cent higher this afternoon after economic data showed inflation pressures hit record levels this month.
The preliminary PMI reading pointed to one of the strongest monthly improvements in business activity since 1998.
“Businesses are reporting an ongoing surge in demand in June as the economy reopens, led by the hospitality sector, meaning the second quarter looks to have seen economic growth rebound very sharply from the first quarter’s decline,” said Chris Williamson, chief business economist at IHS Markit.
Miners BHP Group and Anglo American were the biggest boosts to the index, while travel stocks jumped nearly seven per cent.
Meanwhile, the domestically focused mid-cap FTSE 250 was 0.1 per cent higher after outperforming the premier index in yesterday’s session.
Market movers
The afternoon’s biggest winner was Royal Dutch Shell, who rose 2.9 per cent, followed by GlaxoSmithKline, up by 2.6 per cent.
Oil major BP and BHP Group also rose by 2.1 per cent and 1.8 per cent respectively.
Publishing firm Informa was the afternoon’s biggest faller, dropping by 3.1 per cent, followed by insurer Phoenix Group’s three per cent hit.
Meanwhile, Melrose Industries and British Airways owner IAG both dipped by three per cent and two per cent respectively.
Around the world
Stocks found a footing today after a testimony from US Federal Reserve Chair Jerome Powell gave investors reassurance that the central bank is not rushing to hike rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7 per cent, while Japan’s Nikkei was flat.
The CSI 300 advanced 0.5 per cent, while Hong Kong’s Hang Seng index shot up 1.8 per cent.
Elsewhere, the EuroStoxx 600 was down 0.1 per cent this afternoon and the German Dax dipped 0.3 per cent.
Several other Fed speakers are due to appear later today and their comments may add to a sense among traders that September’s Fed meeting will bring the announcement of stimulus ending later in the year.
“This is all a long way off as even the first hike is a while away,” said AMP Capital’s chief economist Shane Oliver.