Shares jumped and most currencies rose against the dollar on Wednesday, as investors discerned a dovish tone in comments from Federal Reserve chair Jerome Powell, though a policy tweak by the ECB meant European bonds sat out the rally.
MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.76%, though Japan’s Nikkei failed to join in the rally after disappointing results from big tech firms including Nintendo. “The market is looking for a dovish message where it can almost regardless. Powell said effectively the terminal rate could be higher than the market expects, but the Nasdaq and S&P 500 were up, though I think they’re wrong,” said Ben Jones, director of macro research at Invesco.
Powell’s avoidance of a more hawkish tone also gave a cue to currency markets, as the euro strengthened 0.23% against the dollar, and the pound gained 0.33%. However, bonds in Europe continued to sell off after tumbling the previous day when the European Central Bank said it would cut the interest rate it pays governments on deposits.
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