Wednesday 21 August 2019 4:07 pm

US stock markets rise as Federal Reserve enters spotlight

US stock markets have risen in early trading as investors hope for dovish signals from the Federal Reserve and retailers beat expectations.

Read more: Germany sells 30-year bond with negative yields but demand weak

Shares in giant general store chain Target surged over 18 per cent after the retailer beat profit expectations. Shares in DIY store Lowes also jumped, while Best Buy and Home Depot rose.

Retail strength pushed up the S&P 500 by 0.8 per cent by 4pm UK time. The Dow Jones industrial average rose 0.9 per cent and the Nasdaq rose 0.9 per cent.

Traders were also looking forward to the release of the minutes from the Fed’s July meeting, when it cut interest rates by 25 basis points (0.25 percentage points) to between two and 2.25 per cent.

Investors hope the minutes will give an indication that the Fed will cut rates again at its meeting next month.

Stocks have also risen ahead of the central bank’s annual symposium at Jackson Hole, Wyoming on Friday, where chair Jay Powell is expected to hint at a further interest rate cut.

European stock markets were trading higher as they neared the end of the day. France’s CAC 40 was up 1.5 per cent, Germany’s Dax was 1.1 per cent higher, while the FTSE 100 was up one per cent.

“Wednesday turned into another optimistic session for the US and European indices, who appear to be putting all their eggs in a central bank basket,” said Connor Campbell, an analyst at spread betting firm Spreadex.

“Ahead of this evening’s potentially crucial Fed meeting minutes, investors barrelled back into the Western indices, increasingly confident that central banks will step in to try and avert a recession.”

Read more: Danske Bank thinks US Fed will slash rates to one per cent by March

Yields on government bonds rose as investors sold them in favour of stocks. Yields move inversely to prices. US 10-year government bond yields rose 1.6 basis points to 1.571 per cent, while on 10-year German government bonds they rose 0.6 basis points.