Shares and bonds rally as Fed feeds global rate peak hopes

LONDON, Nov 2 (Reuters) – European shares and bonds extended a global rally on Thursday as a non-committal Federal Reserve chief had traders doubling down on bets that U.S. interest rates – the main driver of world borrowing costs – have finally peaked.

With expectations that the Bank of England might send a similar signal in a few hours , Europe’s STOXX 600 (.STOXX) and London’s FTSE (.FTSE) were both up over 1% early on, with the former on course for its first four-day run of gains since July.

Shorter-term bond market yields were at two-month lows and the dollar (.DXY) was back-pedalling in the foreign exchange markets, much to the relief of the Japanese yen and the dozens of emerging market currencies that have been suffering this year. /FRX

Fed Chair Jerome Powell’s comments that its aggressive 20-month run of rate increases was likely to slow the economy after what he had described as the “outsized” jump in Q3 U.S. GDP, was the main takeaway for many analysts, although he had been careful to keep the door open to another hike if needed.

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