LONDON – World share markets were back on form on Thursday as the US Federal Reserve signaled it was in no rush to taper stimulus.

There was also some promising news on the long-awaited US infrastructure bill as the Senate voted overnight to move ahead on the US$1.2 trillion deal, as well as it being a packed day of earnings and economic data.

The rebound in China’s markets included a 10 percent bounce in tech giant Tencent – its second biggest in nearly a decade.

Chinese blue-chip shares bounced 1.9 percent. The main tech index jumped 3.2 percent, while an S&P/BNY Mellon index of US-listed stocks soared 8.3 percent. That was its best day ever, although it is still down 20 percent in July and nearly 50 percent since February.

European stocks hit all-time highs as strong earnings from Total and Shell, Airbus and others offset a near 3 percent drop in Swiss bank Credit Suisse, which reported a near 80 percent profit plunge in the wake of Archegos and Greensill calamities.

MSCI’s broadest index of emerging market shares also bounced 2 percent having slid to its lowest since early December on Wednesday. China’s Tencent and Alibaba make up 10 percent of that index alone.

Japan’s Nikkei had also edged up 0.7 percent in Asia. S&P 500 futures were up a more subdued 0.15 percent though and Nasdaq futures dipped 0.1 percent, perhaps weighed by a retreat in Facebook stock.

Facebook fell 3.6 percent in after-hours trading after it warned revenue growth would “decelerate significantly” following Apple’s recent update to its iOS operating system which is expected to heavily impact target ads.

Peak growth?

Markets were still digesting the Federal Reserve’s policy statement after it said progress had been made toward its economic goals, seeming to bring nearer the day when it might start tapering its massive asset-buying campaign.

Peak growth was also a nagging theme. Data due later on Thursday is expected to show the US economy likely grew at the fastest pace in 38 years in the last quarter as government aid and vaccinations fuelled spending.

However, Fed Chair Jerome Powell added a dovish slant at the central bank’s news conference by emphasising that they were “some ways away” from the substantial progress on jobs needed to start tapering.

JPMorgan economist Michael Feroli said there were three more US job reports before the November meeting, and then two more between the November and December meetings. “We continue to expect a December announcement (on tapering), though we see a risk it could occur in November,” Feroli said.

While the next Fed meeting is not until late September, there is also the annual Jackson Hole policy symposium on Aug 26-28, meaning tapering talk won’t be taking a break.

For bonds, the net result was that US 10-year yields were steady at 1.257 percent, not far from recent five-month lows of 1.128 percent.

“My view is that (longer term) the Fed policy rate will have a 1 percent handle,” said PineBridge’s Global Head of Credit and Fixed Income Steven Oh. “I don’t see an outcome where we see runaway inflation by any stretch of the imagination”.

The pattern was the same for the dollar, which edged up after the FOMC statement only to flag on Powell’s remarks and then dribble lower in both Asia and European trading.

That left the euro up at US$1.1871, and some way from its recent four-month trough of US$1.1750.

The dollar faded to 109.81 yen from a top of 110.58 early in the week, all of which saw the dollar index dip to 92.018, off its recent peak of 93.194.

In commodity markets, China-sensitive copper rose 1.25 percent and gold nudged up to US$1,817 an ounce, though it remained in the US$30 range of the past 17 sessions.

Oil prices also firmed after data showed US crude inventories fell to pre-pandemic levels, bringing the market’s focus back to tight supplies rather than rising COVID-19 infections.

Brent was last up 73 cents at US$75.47 a barrel, while US crude added 80 cents to US$73.21.