Futures rise as taper fears fade

US stock index futures rose on Thursday, indicating Wall Street was set to jump further from recent lows after investors largely brushed off concerns over the Federal Reserve’s plans for tapering.

The Fed said on Wednesday it could begin reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year. The bank also projected inflation at 4.2 per cent by the year-end, more than twice its target rate of 2 per cent.

The November deadline had been largely priced in by markets. Relief over the Fed, along with easing concerns of a default by Chinese property developer Evergrande, saw all three Wall Street indexes jump around 1per cent on Wednesday.

The Dow and the S&P had marked their best day in two months, as they staged a strong recovery from two-month lows hit earlier in the week.

On Thursday, major banks rose in premarket trade on expectations of an eventual rise in interest rates.

US S&P 500 E-minis were up 26.5 points, or 0.6per cent, at 6:29 am ET. Dow E-minis were up 185 points, or 0.54per cent, while Nasdaq 100 E-minis were up 98.75 points, or 0.65 per cent.

Major Wall Street indexes are still trading lower for the month, owing to seasonally weak trends, as well as concerns over fiscal spending and a slowdown in economic growth.

Rick Rieder, chief investment officer of global fixed income at BlackRock, said in a note that robust demand for Treasuries would likely minimize the impact of the Fed’s unwind.

“With the demand for income and financial assets that we’re seeing..., the modest tapering likely to be seen from the Fed is not consequential for markets,” he said.