Global Stocks Rise After Fed Signals Slower Rate Hikes

Global stocks and commodities extended gains Thursday while the dollar continued to weaken after the Federal Reserve signaled a slower pace for U.S. interest rate increases.

The Stoxx Europe 600 gained 0.3% in early trade, led by the basic resources sector, after Wall Street closed at its highest level this year.

Fed officials Wednesday suggested they would likely only raise rates twice this year, down from earlier projections of four increases, while offering a cautious outlook on the world economy. The prospect of lower rates for longer pushed U.S. government bond yields down, making stocks more attractive in comparison. It also weakened the dollar, lifting prices of dollar-denominated commodities. Yields fall as prices rise.

European mining companies gained nearly 5% Thursday as Brent crude rose 2% to $41.15 a barrel and copper futures in London gained 1.4% to $5,064 a ton. Shares in Anglo American PLC were up over 10%, while Glencore PLC gained over 9% and Rio Tinto PLC rose 5% after its chief executive said he would retire in July.

In currencies, the dollar extended its declines Thursday, with the euro last up 0.5% against the dollar at $1.1265. The buck fell 1% against the yen to ¥ 111.6290.The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, fell to its lowest level since October after the Fed announcement. Lower interest rates tend to make a currency less attractive to investors seeking yield.

Gold gained 3.1% to $1,268 an ounce, spurred by a weaker dollar and the prospect of lower rates.

Earlier, stocks in Asia mostly gained, but Japan's Nikkei Stock Average ended lower as a stronger yen weighed on shares of exporters.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

March 17, 2016 05:15 ET (09:15 GMT)

Rio Tinto (NYSE:RIO)
Historical Stock Chart
From Jun 2024 to Jul 2024