Global markets climb on Fed growth, rate outlook

LONDON — World stock markets rose on Thursday on an upbeat outlook from the US Federal Reserve, with the focus now on the Bank of England's upcoming interest rate decision.

Frankfurt jumped 1.2 per cent to hit a fresh record, with sentiment boosted partly by the flotation of Vantage Towers, the German phone masts unit of British telecoms giant Vodafone.

Paris gained 0.2 per cent and London firmed 0.1 per cent before the Bank of England is expected to leave interest rates at a record low 0.1 per cent.

'Supportive' Fed stance 

"The Fed-inspired upbeat mood has broadly transferred to Europe," said OANDA analyst Sophie Griffiths. 

"The Dax is a clear outperformer, powering to a fresh all-time high. Cyclical stocks -- those closely tied to the economy's performance, such as automobiles, banks, miners and travel and leisure -- are leading the gains."

She cautioned however that traders were also weighing up "the Fed's supportive stance against concerns over the covid vaccination programme in Europe".

Asian equities rose after the Fed ramped up its outlook for the US economy and reiterated its pledge to maintain its ultra-loose market-friendly monetary policies for as long as needed.

With growth already expected to burst higher this year, huge stimulus spending kicking in and vaccines being rolled out, investors have in recent weeks grown worried about a surge in inflation that could force the US central bank to reconsider its dovish stance.

But the Fed's decision after its latest board meeting was music to the ears of traders.

Policymakers forecast the world's top economy to expand 6.5 per cent this year, a full two percentage points above their earlier projection.

The upward revision was thanks to trillions of dollars in government spending and the expected easing of lockdown measures that will allow people to get back to their daily lives.

'No hurry to raise rates' 

The Fed continued to pledge that the record low interest rates that have been a key pillar of the year-long markets rally will not be touched for the foreseeable future.

Investors were cheered by projections that borrowing costs will likely stay where they are until possibly 2024, even if inflation surges.

"The overarching message... was of greater optimism on the outlook but a central bank that is not in a hurry to raise rates," said Axi strategist Stephen Innes. 

Wall Street rallied on the news, with the Dow ending above 33,000 for the first time, while the S&P 500 also chalked up a record.