Stocks gain after Feds ‘change of tone’

investmentnews.com:

European shares rallied after dovish comments by Federal Reserve officials and the prospect of more economic stimulus by China brought some risk appetite back to markets as investors continue to evaluate the potential impact of the Israel-Hamas conflict. 

Treasuries jumped, catching up with Monday’s global government bond rally, when cash trading in the US was closed. The yield on the policy-sensitive two-year Treasury dropped by the most since the end of August, while the benchmark 10-year had its best day since March. US equity futures rose and the dollar extended its losing streak to a fifth day. 

The Stoxx Europe 600 index climbed more than 1%, heading for its best day in a month, with all industry sectors in the green. Miners led the advance after Bloomberg reported that China is preparing to unleash a new round of stimulus measures which may support metal p[rices. Anglo American Plc advanced more than 5%, while Glencore Plc and Rio Tinto Plc added more than 3% each.

At the end of last week, traders had boosted bets on another Fed hike this after US employment unexpectedly surged in September. That narrative switched on Monday, however, as central bank officials tamped down the speculation. Fed Vice Chair Philip Jefferson said officials could “proceed carefully” following the recent rise in Treasury yields, and Fed Bank of Dallas President Lorie Logan said the surge in long-term rates may mean less need for further tightening. Another slate of Fed speakers today may add to the picture.

“The latest comments from Fed speakers have had a clear risk-on influence on the market,” said Benjamin Melman, global chief investment officer at Edmond de Rothschild Asset Management. “There’s been a clear change of tone.”

China is