BEIJING — Global stock markets rose on Wednesday after Federal Reserve chair Janet Yellen said the U.S. central bank could raise interest rates as soon as next month, a sign of confidence in the strength of the world's largest economy.
KEEPING SCORE: Britain's FTSE 100 gained 0.5
FED WATCH: Yellen told a Senate committee on Tuesday that the central bank could raise interest rates as soon as next month. Bond yields jumped and fed through to shares of banks, which can benefit from higher rates by charging more for loans. The Fed raised interest rates in December for just the second time in a decade, and Yellen said the strengthening job market and a modest move higher in inflation should warrant continued, gradual increases.
ANALYST'S TAKE: Yellen's comments were "the main catalyst for overnight markets, evidently surprising on the hawkish side," said Jingyi Pan of IG in a report. "While the market had expected a strong rhetoric on improving economic conditions, the push to hasten the next rate hike had been unexpected." Based on history, markets put the likelihood of a policy change out of the Fed's March meeting at 34
CHINA INFLATION: Chinese consumer and wholesale inflation ticked higher, fueling concern the central bank might hike rates or tighten access to credit. Analysts said they saw no sign the People's Bank of China would change course but money market rates should be elevated this year. Policymakers have indicated a "tightening bias" for policy since late last year but December and January data on credit "clearly show that there has been no meaningful monetary and credit tightening at the macro level," said UBS economists in a report.
ASIA'S DAY: Asian markets finished mostly higher. Tokyo's Nikkei 225 index rose 1
CURRENCY: The dollar gained to 114.44 yen from Tuesday's 114.31 yen. The euro edged down to $1.0556 from $1.0571.
ENERGY: Benchmark U.S. crude sank 34 cents to $52.86 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 27 cents on Tuesday. Brent crude, used to price international oils, lost 30 cents to $55.67 in London. It advanced 38 cents the previous session.
Joe McDonald, The Associated Press