World Shares Jump after Powell Nixes Rate Hike Fears

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Global stocks jumped on Thursday after U.S. Federal Reserve Chair Jerome Powell reaffirmed interest rates would stay low for a long time, calming market fears that higher inflation might prompt the central bank to tighten monetary policy.

Powells reassurance gave a fresh impetus to reflation trades and boosted risk asset prices while also driving U.S. bond yields back up to oneyear highs.

European stocks are expected to open higher, with Euro Stoxx 50 futures and FTSE futures both up about 0.6.

In Asia, MSCIs exJapan AsiaPacific shares index rose 1.5 while Japans Nikkei gained 1.7.

Hong Kongs Hang Seng jumped 1.5 to pare more than half of its previous days losses following the announcement of a stamp duty hike.

In a second day of testimony in Washington, Powell reiterated the Feds promise to get the U.S. economy back to full employment and to not worry about inflation unless prices rose in a persistent and troubling way.

Powell said it will take three years for them to achieve its inflation target, essentially reaffirming the Fed will not raise interest rates until 2023, said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

A huge amount of cash investors have to work is flowing into the stock market, and that is more than offsetting any negative aspects of higher bond yields.

The prospects of a prolonged period of low interest rates came as investors expect a huge U.S. fiscal stimulus and a progress in COVID19…

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