European stocks soar as Fed chair drops rate hike course
January 05 2019 12:19 AM
The German share price index DAX graph is seen at the Frankfurt Stock Exchange. The DAX 30 closed 3.4% higher at 10,767.69 points yesterday.

AFP /London

Global stocks shot higher and the dollar sagged yesterday after the head of the US Federal Reserve signalled it was no longer set on raising interest rates.
The US central bank has no “pre-set” plan for interest rates and will bide its time to see how the economy evolves before making any moves, Federal Reserve chairman Jerome Powell said.
The comments signal a major shift from the Fed’s previous indications it would continue hiking interest rates, and Powell noted financial markets were worried about a slowdown in the US and Chinese economies.
Investors have been gripped by fears over the global economy in recent weeks, which have seen stock prices tumble and confidence wane among corporations that foresee slowing demand and weakening sales in 2019.
Powell said the Fed is “prepared to adjust policy quickly and flexibly” to support the economy.
The comments sent US and European stock indices sharply higher, which had already posted gains on data showing that at least in terms of job creation the US economy continues to be healthy.
The US economy added a whopping 312,000 jobs in December, and wages rose steadily, gaining 3.2% for the year.
“A solid set of job numbers and some comfortable words from the chairman of the Federal Reserve have been just the ticket to get markets into bullish mode,” said Chris Beauchamp, chief market analyst at online trading platform IG.
At one point in morning trading the Dow, S&P 500 and Nasdaq Composite were all up by more than 3%.
In Europe, Frankfurt closed 3.4% higher at 10,767.69, followed by a gain of 2.7% to 4,737.12 in Paris, and London rising 2.2% to 6,838.24 points at the close yesterday.
Most Asian exchanges also moved upwards on positive news from China. 
A leading survey of Chinese manufacturing nudged higher for December, confounding analysts who had expected it to decline.
Meanwhile, China’s central bank moved after markets closed there to stimulate the economy by allowing commercial banks to use more of their funds for lending.
market analyst David Cheetham at XTB online trading platform said that move by China’s central bank “cut the bank reserve ratio by 1 percentage point to release around 1.5tn yuan of liquidity and this has sparked a rally this morning in stocks as they look to recover from recent declines.” 
Hopes of progress regarding China-US trade war tensions also provided support to equities, analysts said.

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