Markets build on gains as bank, rate concerns ease
With the financial turmoil of recent weeks subsiding, traders are refocusing on the battle against inflation, though expectations for how high borrowing costs will go have lowered.
The US Federal Reserve had been tipped to push rates well above five percent by the end of the year, but with credit seen narrowing in light of the latest upheaval, forecasts are for them to finish just above four percent.
That has helped push up equities, which had been under pressure through February and March.
And even comments from top Fed officials warning that the bank would need to keep its focus on fighting inflation -- despite concerns about the finance sector -- helped sentiment on trading floors.
Boston Fed boss Susan Collins said the banking system was on safe ground, telling a business conference: "Inflation remains too high, and recent indicators reinforce my view that there is more work to do to bring inflation down to the two percent target associated with price stability."
Meanwhile, Richmond president Thomas Barkin warned stepping back from the battle against soaring prices would be foolhardy.
"If you back off on inflation too soon, inflation comes back stronger, requiring the Fed to do even more, with even more damage," he said.
"With inflation high, broad-based and persistent, I didn't want to take that risk."
Still, all three main indexes on Wall Street pushed well up Thursday, as did European equities following the release of data indicating inflation on the continent was slowing.
In a sign of the improved mood on trading floors, the so-called VIX "fear" index dropped below 20 to its lowest point since the start of March.
In Asia, markets finished a rollercoaster first quarter of the year on a strong note.
Hong Kong was boosted by a rally in tech firms after it emerged that e-commerce giant Alibaba's logistics arm was preparing for a listing in the city.
News of the IPO by Cainiao Network Technology came after Alibaba said it intended to split into six units and go public.
Alibaba was up more than three percent. Its rival JD.com jumped more than five percent on news that two of its subsidiaries had filed for IPOs in Hong Kong.
Factory and services activity data suggesting the Chinese economy continued to improve also lifted confidence.
Shanghai, Tokyo, Sydney, Seoul, Singapore and Taipei were also in positive territory, though there was selling in Manila, Jakarta and Wellington.
European markets were mixed in early trade, with London flat, Paris up and Frankfurt down.
"So, a solid quarter but the gains largely front-loaded in the first two months of the year as the market picked up on hopes the Fed would pivot -- no one foresaw that a banking crisis and credit crunch might be the reasons for this," said Neil Wilson at Markets.com. "China's reopening was another factor."
Investors are now awaiting the release of US and eurozone inflation data later in the day, which should provide a better insight into how much impact rate hikes are having in taming prices.
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: UP 0.9 percent at 28,041.48 (close)
Hong Kong - Hang Seng Index: UP 0.5 percent at 20,400.11 (close)
Shanghai - Composite: UP 0.4 percent at 3,272.86 (close)
London - FTSE 100: FLAT at 7,620.42
Euro/dollar: DOWN at $1.0882 from $1.0910 on Thursday
Pound/dollar: DOWN at $1.2364 from $1.2385
Euro/pound: DOWN at 88.00 pence from 88.03 pence
Dollar/yen: UP at 132.98 yen from 132.67 yen
West Texas Intermediate: DOWN 0.5 percent at $73.99 per barrel
Brent North Sea crude: DOWN 0.6 percent at $78.10 per barrel
New York - Dow: UP 0.4 percent at 32,859.03 (close)
dan/mtp
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