Morning Chronicle - Stocks advance after Powell rekindles rate cut hopes

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Stocks advance after Powell rekindles rate cut hopes
Stocks advance after Powell rekindles rate cut hopes / Photo: Bonnie Cash - GETTY IMAGES NORTH AMERICA/AFP

Stocks advance after Powell rekindles rate cut hopes

European and US equities mostly pushed higher on Wednesday, with Wall Street striking fresh records, as comments by US Federal Reserve chief Jerome Powell rekindled hopes of interest-rate cuts later this year.

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At the opening bell, the S&P 500 and Nasdaq Composite both advanced to set new intraday record highs. The Dow traded flat.

London, Frankfurt and Paris also rebounded from recent losses sparked by French post-election uncertainty.

Traders shrugged off a mixed Asian showing and awaited further comments from Powell.

The dollar traded mixed.

Although his semi-annual Senate testimony on Tuesday did not indicate when Fed interest-rate cuts may come, analysts are predicting the first in September and a second before year's end.

"Powell placed emphasis on needing 'greater confidence' that inflation was moving back towards target but also acknowledged the risk of leaving interest rates high for too long, pointing to cooling labour market conditions and the risk of unduly weakening economic activity," noted Lindsay James, investment strategist at Quilter Investors.

"The Fed's preferred measure of inflation, core PCE inflation, now providing a more reassuring message, together with the signs of a cooling economy, (means) that investors' expectations of two rate cuts... are reasonable" by the end of the year.

James stressed however that the US central bank would refrain from any move in rates in November, in order to show impartiality close to a US presidential election.

Powell is set to testify before a House committee Wednesday, and investors will also be eyeing US consumer inflation data due Thursday for further insight that price rises are still easing as hoped.

"Thursday's CPI data could be crucial in determining whether the probability of a September rate cut increases further from the current 70 percent," said SPI Asset Management's Stephen Innes.

In Asia on Wednesday, Hong Kong stocks finished in the red after earlier rising more than one percent. Shanghai closed lower, and Sydney, Mumbai and Manila were also down.

But Tokyo stocks advanced with the benchmark Nikkei 225 reaching an all-time high. Seoul was flat, while Taipei, Wellington, Bangkok, Singapore, Jakarta and Kuala Lumpur all rose.

- Key figures around 1330 GMT -

New York - Dow: FLAT at 39,278.75 points

New York - S&P 500: UP 0.2 percent at 5,590.57

New York - Nasdaq Composite: UP 0.5 percent at 18,516.62

London - FTSE 100: UP 0.5 percent at 8,183.98

Paris - CAC 40: UP 0.7 percent at 7,560.86

Frankfurt - DAX: UP 0.7 percent at 18,370.22

EURO STOXX 50: UP 0.8 percent at 4,940.59

Tokyo - Nikkei 225: UP 0.6 percent at 41,831.99 (close)

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 17,471.67 (close)

Shanghai - Composite: DOWN 0.7 percent at 2,939.36 (close)

Euro/dollar: UP at $1.0825 from $1.0819 at 2040 GMT on Tuesday

Pound/dollar: UP at $1.2810 from $1.2790

Dollar/yen: UP at 161.53 yen from 161.29 yen

Euro/pound: DOWN at 84.51 pence from 84.56 pence

West Texas Intermediate: DOWN 0.2 percent at $81.27 per barrel

Brent North Sea Crude: DOWN 0.3 percent at $84.41 per barrel