US tech stocks strike highs in wake of Fed taper

·3-min read
The Bank of England wrongfooted some market players by leaving its key interest rates unchanged (AFP/JUSTIN TALLIS)

Global stock markets mostly rose on Thursday, with US tech stocks hitting a new high a day after the Federal Reserve said it would start "tapering" its pandemic support programme.

Meanwhile, the Bank of England opted to keep its gunpowder dry on possible policy moves for now, confounding many market players who had been betting on an interest rate hike and sending the pound lower against the dollar.

It left benchmark borrowing costs at the current low of 0.1 percent and kept its bond-buying stimulus programme unchanged.

The decision "will come as a surprise to some in markets", said Berenberg economist Kallum Pickering.

But it was "the correct decision", he said. "By keeping rates on hold, the BoE will force markets to reconsider the likely path of rates over the coming years."

Stock prices in London pushed higher after the announcement.

The BoE's move contrasted with that of the US Federal Reserve on Wednesday, when it said it would start reducing the monthly pace of quantitative easing stimulus purchases by $10 billion (8.7 billion euros) for Treasuries and $5 billion for mortgage-backed securities.

That announcement fuelled another record rally on Wall Street and bumper gains across Asia and Europe on Thursday. Frankfurt closed above 16,000 points for the first time and Paris set a record close for the third day running.

Wall Street was mixed in midday trading on Thursday, however, with the Dow down 0.3 percent.

But the tech-heavy Nasdaq rose 0.6 percent to strike a new intraday record.

US tech companies have benefitted greatly from the money injected into the markets by the Fed's stimulus programme.

The slow tapering of stimulus funds and the Fed's indication it is in no rush to raise interest rates helped boost sentiment.

The announcement brought to an end months of speculation about the Fed's plan for the bond-buying programme, and removed some unease among traders who were concerned that officials were leaving it too late to respond to rocketing inflation.

The move makes the Fed the latest monetary authority -- after central banks in Canada and South Korea -- to begin winding back the measures put in place at the start of the pandemic which have been crucial to the global rebound and an 18-month equity rally to multi-year or record highs.

At the same time, supply bottlenecks and shortages have caused global consumer prices to rise, prompting criticism that the Fed and other central banks have become overly complacent about inflation risks.

There was little relief for concerns about high oil prices when OPEC and its allies decided on Thursday to make only a planned modest increase in output despite appeals from consumer-nations to boost production.

Oil prices gave up their gains following the decision, but remained above $80 per barrel.

- Key figures around 1630 GMT -

New York - Dow: DOWN 0.3 percent at 36,052.36 points

EURO STOXX 50: UP 0.5 percent at 4,331.15

London - FTSE 100: UP 0.4 percent at 7,279.91 (close)

Frankfurt - DAX: UP 0.4 percent at 16,029.65 (close)

Paris - CAC 40: UP 0.5 percent at 6,987.79 (close)

Tokyo - Nikkei 225: UP 0.9 percent at 29,794.37 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 25,225.19 (close)

Shanghai - Composite: UP 0.8 percent at 3,526.87 (close)

Euro/dollar: DOWN at $1.1546 from $1.1612 at 2100 GMT Wednesday

Dollar/yen: DOWN at 113.74 from 114.01 yen

Pound/dollar: DOWN at $1.3506 from $1.3687

Euro/pound: UP at 85.50 pence from 84.83 pence

Brent North Sea crude: UP 0.1 percent at $82.09 per barrel

West Texas Intermediate: DOWN 0.3 percent at $80.64 per barrel

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