Global Shares Rise on Fed Signals
Central bank’s statement damps expectations of interest-rate increases
Georgi Kantchev
Updated July 27, 2017 5:53 a.m. ET
By
Georgi Kantchev
Global markets advanced and the dollar fell Thursday after the Federal Reserve damped expectations for U.S. interest-rate increases and investors focused on upbeat earnings reports.
Futures suggested the S&P 500 would add 0.3% at the opening bell. The Stoxx Europe 600 was broadly flat after fluctuating amid a flurry of earnings reports. That followed gains in indexes across Asia.
U.S. stock indexes climbed to fresh records Wednesday after investors found a dovish tilt in the Fed’s latest statement and corporate earnings continued to beat Wall Street expectations.
Samsung reported a record quarter for profit, positioning it to potentially top Apple for earnings.
Samsung reported a record quarter for profit, positioning it to potentially top Apple for earnings. Photo: SeongJoon Cho/Bloomberg News
Of the more than a third of the S&P 500 companies that had reported results through Wednesday, 78% beat earnings estimates, according to Thomson Reuters.
“Earnings are coming in above expectations, which is justifying the move up in equities,” said Jeff Zipper, managing director at the Private Client Reserve of U.S. Bank, which has $145 billion under management. “At the same time, the weaker dollar is good for multinationals’ bottom lines.”
On Thursday, Royal Dutch Shell PLC kicked off big oil’s second-quarter earnings season with a strong showing, reporting a sharp increase in cash flow from operating activities to $11.3 billion. Shell’s shares gained 1.1%. In Asia, Samsung Electronics Co. delivered its biggest-ever quarter of profit, the South Korean technology giant said.
Deutsche Bank AG beat analysts’ expectations in the second quarter, but year-over-year revenue fell in all three business divisions of the German lender. Deutsche Bank shares were down 3.7%.
At the Fed, officials voted unanimously to leave interest rates unchanged and signaled that the central bank could start shrinking its balance sheet “relatively soon.” But tweaks in the Fed’s statement indicated that policy makers have grown more concerned about a recent slowdown in inflation.
“As long as the next Fed moves are well telegraphed, it shouldn’t present a curveball for the market,” Mr. Zipper said. “So far that seems to be the case.”
Investors see a roughly 47% chance of a rate rise by the end of the year, according to Fed-fund futures tracked by CME Group .
The ICE U.S. Dollar Index, which tracks the greenback against a basket of other currencies, was down 0.2%. The British pound hit its highest level since September against the dollar, rising 0.2% to $1.314.
Yields on 10-year Treasurys rose to 2.291% from 2.285% on Wednesday, while German bund yields fell to 0.519%. Yields move inversely to prices.
In Asia, the Nikkei Stock Average gained 0.2% while Hong Kong’s Hang Seng Index was up 0.8% at a 2-year high.
In commodities, oil prices were down, with Brent crude, the international benchmark, falling 0.3% to $50.95 a barrel. Gold was up 1%.
—Ese Erheriene contributed to this article.
Write to Georgi Kantchev at
georgi.kantchev@wsj.com