Shares of banks and other financial institutions surged as the Federal Reserve's unanticipated pivot to a dovish stance spurred hopes of a revival in global markets and loan demand.

Regional banks and commercial property investors built on their Wednesday gains as investors digested the implications of Fed Chairman Jerome Powell's about-face.

The average 30-year residential mortgage rate fell below 7% for the first time in months, likely foreshadowing a sharp increase in demand for home loans.

Treasury yields traded at their lowest levels since the summer, and have likely peaked for the current economic cycle. That's taking pressure off regional banks, many of whom were constrained by market losses on long-term Treasury holdings. The SPDR Regional Banking exchange-traded fund, a basket of mid-sized lenders, rose by roughly 5%.

The Bank of England and the European Central Bank kept rates unchanged as Western central banks begin to reposition themselves for a world in which inflation is no longer the principal economic worry.

Bank of America, a major consumer lender, continued its torrid run. Commercial property investor Boston Properties added more than 7% for the second straight session.

Blackstone, an alternative investment firm that often invests with borrowed money, rose 7% to the highest level since 2022.

Shares of conventional investment managers also surged as traders bet the rally in equity and bond markets would lure back gun-shy investors following a prolonged bear market. Morgan Stanely, whose wealth management unit has become a major growth driver in recent years, rose by more than 6%.

The Fed has signalled that the coast is clear for investors, said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund.

Troubled Chinese property giant Country Garden will sell a stake in a commercial center operator for about $428 million, as it seeks funds to refinance its debt.

French bank Credit Agricole said it won't finance any new fossil-fuel extraction projects and that it aims to be carbon neutral by 2050, a nod to the United Nations COP28 climate conference's pledge on coal, oil and natural gas.


Write to Rob Curran at rob.curran@dowjones.com

(END) Dow Jones Newswires

12-14-23 1749ET