Global Markets Cheered Fed’s Hint at Slowing Down Rate Hike Pace

U.S. equities stormed back from deep losses triggered by the Fed's rate hike decision after Chairman Jerome Powell said the central bank’s efforts to control inflation are “working as expected”. The Dow had been down 500 points before finishing with a small gain. The S&P 500 was up 1%, and the Nasdaq added 2%.

Yesterday was a big day for semiconductor stocks after Advanced Micro Devices (AMD) beat its earnings expectations by a wide margin. It led the S&P 500 higher, while Intel (INTC) led the Dow Jones higher, and shares of others in the sector jumped. Shares of Old Dominion Freight Line (ODFL) hit an all-time high as the shipping company’s earnings beat forecasts. Peloton Interactive (PTON) shares skyrocketed 26% after the struggling connected fitness equipment vendor cut its losses.

FedEx (FDX) shares rose after the postal service giant announced it was laying off 10% of its personnel to optimize expenses. In the same fashion, Rivan Automotive (RIVN) reduced its workforce by 6% to save money, and its shares also gained. Shares of Meta Platforms (META) rose ahead of its after-the-bell earnings report, and shares are taking off in extended trading.

Meanwhile, European stocks gained for the first time in 4 days as investors cheered signals from the Federal Reserve, BoE and ECB that inflation pressures were easing. In this context, The Bank of England's (BoE) Monetary Policy Committee (MPC) revealed earlier today that it raised its interest rate by 0.5 percentage points to 4%, with the rate standing at its highest level since October 2008. This was the 10th consecutive hike. U.K. inflation came in at 10.7% in December, down slightly from the previous month’s 41-year high of 11.1% as easing fuel prices helped to ease price pressures, but many British households are still struggling which provoked the largest rally of protesters in London. Also, ECB head Christine Lagarde remarked that the regulator is planning to raise the key interest rates by another 50 basis points at the Governing Council's next meeting in March, on top of today’s move.

In numbers, the Stoxx 600 was up 0.9% at 3:00 p.m. CET, catching up with a rally in U.S. stocks. The German DAX skyrocketed 1.52%, while the British FTSE 100 rose 0.83% at the same time. The French CAC 40 advanced 0.62% concurrently.

Earlier this morning, the Asian markets also rose. The Australian extended the gains in the previous session, with the benchmark S&P/ASX 200 ending above the 7,500 level to a 9-month highs, with strong gains in gold mining and technology stocks partially offset by weakness in iron ore mining and energy stocks. Among major miners, Rio Tinto (RIO.AX) lost almost 2.4 % and Fortescue Metals (FMG.AX) ended down 0.4%.