China Buyers Re-Emerge as Dollar Suffers after Fed Meeting

On Thursday, the world share markets were once more climbing back up, as the US Fed signaled at the end of its Wednesday meeting that it was in no hurry to taper stimulus. Plus, the Chinese stock also leaped off the canvas after getting reassurances from Beijing. The long-awaited US infrastructure bill also had some promising news with overnight voting by the Senate to move forward on the $2.1 trillion deal. Plus, the day was also packed with economic data and earnings. China’s market rebound included an almost 10% jump in tech company Tencent, which is its second-biggest increase in almost a decade.

This came after reports that regulators had held a meeting with top investment banks for easing concerns about the recent regulatory crackdown on sectors, such as education and tech, along with the overseas listing. Market strategists said that Beijing was making a significant effort to alleviate the growing concerns about its regulatory moves. Blue-chip shares were up by 1.6%, thanks to gains, even though they were still 5% down for the week, whereas there was a 1.2% jump in the Shanghai Composite Index. Moreover, this also helped European stocks reach an all-time high as strong earnings from Airbus, Shell and Total and others managed to offset an almost 5% drop by Credit Suisse.

The Swiss bank reported a plunge in its profits by almost 80% in the wake of the Greensill and Archegos calamities. The broadest index of emerging market shares of the MSCI rose by 2%, after having declined to its lowest on Wednesday since early December. There was also a 0.7% increase in Japan’s Nikkei, whereas a 0.2% jump for South Korea. S&P 500 futures were more subdued, as they only inched up by 0.1%, whereas Nasdaq futures dipped by just as much, probably weighed down due to a fall in Facebook stock.

On Wednesday, aftermarket moves saw Facebook shed its value by almost 3.5% after it had warned that its revenue growth would significantly decelerate, even as it boasted strong ad sales. Overnight the markets had see-sawed when the statement of the Federal Reserve indicated that they had made progress towards reaching their economic goals. This would bring nearer the day when the Fed might start tapering off its massive asset-buying campaign. Another nagging theme was peak growth. Data due on Thursday is expected to reveal that the growth of the US economy is fastest in 38 years in the previous quarter, as vaccinations and government aid fueled spending.

However, a dovish turn was taken by Jerome Powell, the Chairman of the Federal Reserve, when he emphasized that they were still a ways from making substantial progress in terms of jobs before they can start tapering. Before the November meeting of the Fed, there are three more job reports to come and two more that will come between the November and December meetings. Hence, an announcement in December is more likely, though there is a possibility that it could even happen in November.