NEW YORK (Reuters) - Global equity markets rose on Wednesday after minutes from the Federal Reserve indicated there is no rush to bring forward plans to raise interest rates in the future, reversing earlier declines that were driven by hints from the Bank of England of an early rate hike.
The Fed said it has been surprised by how quickly the U.S. labor market is healing, yet the recovery needs to be more convincing to change its view on when to increase rates.
Stocks on Wall Street rallied after the release of the Fed minutes, suggesting investors believe there will be no change in monetary policy, while U.S. Treasuries prices fell.
“The Fed remains dovish. However, one eye is looking towards improvements in labor markets. Potentially a rate increase might come slightly sooner or the increases might come faster than expected,” said Putri Pascualy, credit strategist For Pacific Alternative Asset Management Company, in Irving, California.
MSCI’s all-country world equity index rose 0.05 percent.
The Dow Jones industrial average closed up 59.54 points, or 0.35 percent, to 16,979.13. The S&P 500 gained 4.91 points, or 0.25 percent, to 1,986.51, and the Nasdaq Composite dropped 1.032 points, or 0.02 percent, to 4,526.482.
Earlier in Europe, the FTSEurofirst 300 index of leading European shares closed down 0.07 percent at 1,346.02 points, pushed lower in part from minutes of a Bank of England meeting where two policymakers took a hawkish stance on interest rates.
A warning from brewer Carlsberg that profits would fall this year due to deteriorating conditions in Russia also rattled European investors.
Sterling and UK bond yields rose after the surprise tilt toward higher British rates, while the U.S. dollar advanced to its highest level against the euro since last September.
The Fed minutes come ahead of Fed Chair Janet Yellen’s widely anticipated address to the annual gathering of central bankers in Jackson Hole, Wyoming, on Friday.
With U.S. and global stock indexes trading close to all-time highs, investors await a reaffirmation of the accommodative monetary policies that have helped spur a global rally.
“The next leg up is going to come from what we hear on Friday from Yellen,” said Phil Orlando, chief equity market strategist at Federated Investors in New York. “The market has been a little bit on tenterhooks.”
The dollar broke through resistance at $1.3300 and last November’s high of $1.3295 per euro to trade as high as $1.3275. It was last up 0.41 percent versus the euro at $1.3265.
It climbed to a 4-1/2-month high against the yen.
U.S. crude oil rose more than $1 a barrel ahead of the September contract’s expiry on Wednesday and as crude stocks in the United States posted a sharp fall, while Brent bounced off a 14-month low to reach $102.
Brent crude for delivery in October settled 72 cents higher at $102.28 a barrel. The U.S. crude contract for September delivery rose $1.59 to settle at $96.07.
U.S. Treasuries fell, with the benchmark 10-year note down 6/32 in price to yield 2.4281 percent.
Reporting by Herbert Lash; Additional reporting by Jamie McGeever in London; Editing by Dan Grebler, James Dalgleish and Leslie Adler