Stock markets advance in face of Fed rate hike expectations

LONDON _ Stock market investors appear undeterred by the prospect of more interest rate hikes from the Federal Reserve next year as indexes continued to edge higher on Friday.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was up 0.1 per cent at 7,009 while Germany’s DAX rose 0.3 per cent to 11,399. The CAC-40 in France was also 0.3 per cent higher at 4,834. U.S. stocks were poised for modest gains at the open too with Dow futures and the broader S&P 500 futures 0.2 per cent higher.

POST-HIKE PERSPECTIVE: After an initial jolt from the Fed’s interest rate hike decision this week, markets are adjusting to the prospect of more increases that policymakers signalled were in store as they move to “normalize” interest rates. The Fed raised rates for only the second time in a decade and hinted three more hikes are on the way in 2017, rattling markets used to ultralow borrowing costs that have fueled a multiyear stock boom. The Fed’s move now shifts the focus from central bank policy to economic growth as the driver of stock market performance.

MARKET VIEW: “Given the strength of the economy and potential for higher levels of economic growth in the coming years, it would appear rate hikes are no longer met with fear and panic, at least for now,” said Craig Erlam, senior market analyst at OANDA.

ASIAN SCORECARD: Japan’s benchmark Nikkei 225 index rose 0.7 per cent to close at 19,401.15 as the weakening yen helped shares of the country’s exporters. Other Asian indexes were listless. South Korea’s Kospi added 0.3 per cent to 2,042.24 and Hong Kong’s Hang Seng gave up the day’s gains in the final hour to close 0.2 per cent lower at 22,020.75. The Shanghai Composite Index in mainland China gained 0.2 per cent to 3,122.98 and Australia’s S&P/ASX 200 ticked 0.1 per cent lower to 5,532.90.

CURRENCIES: The dollar, which struck near 14-year highs against the euro on Thursday in the wake of the Fed’s rate hike, lost some ground as traders booked in some profits. The euro was up 0.3 per cent at $1.0441 while the dollar fell 0.1 per cent to 118.17 yen.

ENERGY: Benchmark U.S. crude rose 28 cents to $51.18 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the international standard, rose 43 cents to $54.45 a barrel in London.