World shares get boost from US Fed signal on rate cuts

World shares surged Wednesday after the Federal Reserve signaled it was ready to cut interest rates to support the US economy against risks from trade conflicts, according to AP.

But Asian markets gave back some early gains after the World Bank said it was downgrading its forecast for the global economy in light of those trade disputes and other strains.

Britain’s FTSE 100 gained 0.4 per cent to 7,240.91, while the DAX in Germany advanced 0.7 per cent to 12,049.36.

The CAC 40 in France also gained 0.7 per cent, to 5,306.83. Wall Street looked set to extend gains, with the future contract for the Dow Jones Industrial Average up 0.3 per cent to 25,423.00. The S&P 500 future gained 0.4 per cent to 2,814.80.

The World Bank said it expects the world economy to expand at a 2.6 per cent pace this year, the slowest growth since 2016 and below its 2.9 per cent forecast made in January.

“We are not pushing the panic button yet,” said Ayhan Kose, a World Bank economist. But he said the anti-poverty agency foresees a potentially deeper slowdown if trade hostilities persist.

That cast a slight damper on market sentiment, though most Asian benchmarks still captured moderate gains.

Japan’s Nikkei 225 index jumped 1.8 per cent to 20,776.10 while the Hang Seng in Hong Kong advanced 0.5 per cent to 26,895.44. The Shanghai Composite index gave up 0.86 points, ending almost flat at 2,861.42. South Korea’s Kospi added 0.1 per cent to 2,069.11.

Australia’s S&P ASX 200 climbed 0.4 per cent to 6,358.50 after the central bank’s decision Tuesday to trim its benchmark interest rate by a quarter of a percentage point, the first such cut in nearly three years.

The biggest lift for regional markets came from Fed Chairman Jerome Powell’s comment Tuesday that the central bank was “closely monitoring” trade developments and would “act as appropriate” to sustain the US economic expansion.

Fresh hopes for resolving the U.S.-Mexico trade dispute also helped.