TOKYO (AP) – Shares edged higher in early European trading Thursday, tracking gains in Asia after Federal Reserve Chair Janet Yellen told Congress the central bank may slow the pace of its interest rate increases if inflation remains below its target level. Japan’s Nikkei 225 was flat as a stronger yen cast a shadow over exporters’ shares, but shares in South Korea and China were boosted by strong data reports.
KEEPING SCORE: Germany’s DAX was flat at 12,627.14 and the CAC 40 of France edged 0.1 percent higher to 5,228.05. Britain’s FTSE 100 edged 0.2 percent lower to 7,405.91. Dow futures were 0.1 percent higher and S&P 500 futures climbed 0.2 percent, suggesting an upbeat start for Wall Street.
ASIA’S DAY: Japan’s Nikkei 225 stock index was flat at 20,099.81 and Hong Kong’s Hang Seng index jumped 1.2 percent to 26,345.27. The Shanghai Composite index climbed 0.6 percent at 3,218.16 and the S&P ASX 200 advanced 1.1 percent to 5,736.80. South Korea’s Kospi gained 0.7 percent to 2,409.49. Shares in Southeast Asia and Taiwan were mostly higher.
FED TALK: Yellen’s comments in her semiannual testimony to Congress assuaged concerns among some traders that the Fed has been too hasty in raising interest rates despite stalling inflation and sluggish U.S. economic growth of just 1.4 percent in the first quarter. Many economists believe the Fed, which has raised rates three times since December, will increase rates one more time this year. The comments pushed the Dow up 0.6 percent to 21,532.14, a record high. The average last set a record high on June 19.
THE QUOTE: “While nothing groundbreaking in Chair Yellen’s perfunctory testimony, she unambiguously drew attention to inflation as the critical determinant of Fed rate hikes,” Stephen Innes, a senior trader at OANDA, said in a commentary. “Nothing better for investment sentiment than Dr. Yellen providing an upbeat economic assessment with a tepid inflation outlook.”