Market mood settles after Fed rate hike concern

LONDON – Global stock markets recovered their poise Friday in the wake of sizeable falls triggered by the U.S. Federal Reserve’s surprise indication that it could raise interest rates in June.

KEEPING SCORE: In Europe, Britain’s FTSE 100 was up 1.3 per cent at 6,131 while Germany’s DAX rose 0.8 per cent to 9,875. France’s CAC 40 advanced 1 per cent to 4,327. U.S. stocks were poised for solid gains at the open with Dow futures and the broader S&P 500 futures up 0.3 per cent.

FED WATCH: Whether the Fed will raise interest rates or not in June is set to be the main driving force across financial markets in coming weeks. On Wednesday, the minutes to the last rate-setting meeting showed Fed officials talking about the possibility of an increase in June — a development that few in the markets had anticipated and which prompted some jitters among investors. But a rate hike is not a certainty given the many potential hurdles ahead, including potential concern over the British vote on whether to stay in the European Union. The vote on so-called Brexit takes place about a week after the Fed’s next meeting.

ANALYST TAKE: “Ultimately, the fact is that while a June hike is increasingly credible, it is still the least likely of their two options,” said Joshua Mahony, market analyst at IG. “With huge economic implications to the Brexit vote, it is unlikely we will see any action from the Fed next month.”

ASIA’S DAY: Japan’s Nikkei 225 rose 0.5 per cent to 16,736.35 while South Korea’s Kospi edged up 0.1 per cent to 1,947.67. Hong Kong’s Hang Seng index rose 0.8 per cent to 19,852.20. China’s Shanghai Composite Index added 0.7 per cent to 2,825.48. Australia’s S&P/ASX 200 gained 0.5 per cent to 5,351.30.

OIL: Oil prices were relatively flat, with the benchmark New York rate down 2 cents at $48.63 a barrel and Brent, used to price international oils, fell 18 cents to $48.63 a barrel in London.

CURRENCIES: The euro was up 0.2 per cent at $1.1219 while the dollar rose 0.4 per cent to 110.39 yen.