Stocks rise awaiting Fed update

LONDON — Stock markets mostly rose on Wednesday, recovering further from recent sharp losses on easing concerns over Chinese property giant Evergrande ahead of a key update from the Federal Reserve.

The dollar also gained against most of its biggest rivals, while oil prices won solid support.

Nerves were settled by news that Evergrande had agreed a plan to repay interest on one of its key bonds, avoiding a default that many fear could hammer the domestic and global economy.

However, confidence remains at a premium as traders awaited the outcome of the meeting of the Federal Reserve (Fed), which was expected to announce a timetable to start tapering its vast monetary easing programme.

"Having seen some very bad days for equities in recent sessions, Europe and parts of Asia were more upbeat on Wednesday," noted AJ Bell investment director Russ Mould, who suggested the Fed outcome "could give further support to markets".

More hawkish Fed? 

But Fawad Razaqzada, market analyst at ThinkMarkets, warned "volatility" could return to the markets in the event of "a hawkish tilt from the Fed, which may trigger some risk aversion".

"The later tapering starts, the better it will likely be for risk assets — and gold," said Razaqzada, who added that, "overall, there is greater risk that the Fed will come across as being more hawkish than in June."

The US central bank's meeting comes against the ever-present backdrop of spiking coronavirus infections and slowing global growth.

But despite those concerns, Wall Street was 0.6 per cent up shortly after the opening bell while Frankfurt, London and Paris also showed similar gains. 

Fed officials have signalled that by the end of the year they will begin winding down the ultra-loose monetary policies put in place at the start of the pandemic which have been key to driving a global economic and equity-prices recovery.

The growing consensus is that the first announcement will be in November and the first reduction the next month. But Fed boss Jerome Powell could still provide details on the timetable.

The decision comes as the Fed tries to keep a lid on surging inflation and prevent the recovering economy from overheating.

On the corporate front, shares in Entain gained 6 per cent after the UK gambling giant revealed that it had received a takeover bid from US rival DraftKings worth $22.5 billion.