Global stock indexes have rallied to record highs, while government bond yields fell after the European Central Bank held interest rates steady and Federal Reserve Chair Jerome Powell reiterated that easing was likely in 2024 if inflation behaved.

The yield on benchmark 10-year US Treasury notes hit a near one-month low then steadied as investors adjusted positions before Friday’s release of the February US payrolls report.

That is a highly anticipated monthly US economic release because of its centrality to the Fed’s high employment and low inflation mandates.

While the ECB left its policy rate at a record high, it took a first, small step towards lowering it, saying inflation was easing faster than it anticipated only a few months ago.

“We are making good progress towards our inflation target and we are more confident as a result – but we are not sufficiently confident,” ECB President Christine Lagarde told a press conference.

That sent the pan-European STOXX 600 to a record high. It closed up 0.99 per cent, while Europe’s broad FTSEurofirst 300 index rose 20.37 points, or 1.03 per cent

In the US, Powell on Wednesday testified before the House Financial Services Committee, saying rate reductions would “likely be appropriate” this year “if the economy evolves broadly as expected” and once officials gained more confidence in inflation’s steady decline. He repeated those comments before the Senate Banking Committee on Thursday.

Quincy Krosby, chief global strategist LPL Financial, said the market was not hoping for a blowout number. Rather it was focused on whether wages had levelled off while underpinning a “still resilient labour market.”

The Dow Jones Industrial Average rose 130.30 points, or 0.34 per cent, to 38,791.35. The S&P 500 gained 52.60 points, or 1.03 per cent, to 5,157.36, a record high close.

The Nasdaq Composite hit an intraday record high and narrowly missed a closing record to end up 241.83 points, or 1.51 per cent, at 16,273.38.

MSCI’s gauge of stocks across the globe went up 7.55 points, or 0.99 per cent, closing at an all-time high.

The dollar posted its biggest fall since late December against the yen, which rose on data showing Japanese workers’ nominal pay surged in January, after the country’s major employment union won big pay hikes in 2024 wage talks.

Bank of Japan board member Junko Nakagawa signalled her conviction that conditions for phasing out negative rates were now falling into place.

Against the Japanese yen, the dollar fell 0.88 per cent to 148.05. The dollar index fell 0.52 per cent to 102.80, with the euro up 0.47 per cent at $1.0948.

“The bond market’s up. Commodities are up. Investors are buying everything except the dollar. There’s more optimism about the economy. There’s more optimism about earnings and there’s more optimism about policy,” said John Augustine, chief investment officer at Huntington Private Bank, also citing the MSCI world share index’s record high.

The resurgent yen pulled Japanese stock indexes down from near records. Japan’s Nikkei fell 492.07 points, or 1.23 per cent, to 39,598.71.

MSCI’s broadest index of Asia-Pacific shares outside Japan ended the day 0.53 per cent higher.

The 10-year Treasury note yield continued a week-long slide to its lowest in about a month before steadying a bit. It was last off 1.7 basis points from late Wednesday at 4.087 per cent.

That followed a similar drop in German Bund yields .

In cryptocurrencies, bitcoin gained 1.17 per cent at $67,244.00, while Ethereum rose 1.21 per cent at $3895.9.

Gold prices hit an all-time high on Thursday as Powell’s comments fostered expectations for lower US interest rates this year, which would make zero-yield gold more attractive to investors.

Spot gold went up 0.46 per cent to $2,158.27 an ounce. US gold futures gained 0.4 per cent to $2,158.90 an ounce.

Oil prices ended little changed.

US crude slipped 20 cents per barrel to close at $78.93 and Brent settled flat $82.96 per barrel.

This post was originally published on Michael West.