Tag Archives: World Market

World Stocks hit one year high as Fed hike prospects fade

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany,

By Nigel Stephenson

LONDON (Reuters) – World stocks hit their highest in more than a year and the dollar fell sharply against the yen on Wednesday as expectations of a rise in Federal Reserve interest rates receded after weak U.S. economic data.

Emerging market shares led the charge, touching their strongest levels since July 2015 as investors sought yield with interest rates likely to stay low for a prolonged period.

But European shares dipped in early trade. The Stoxx 600 index  fell 0.2 percent led lower by banks, for whom rock-bottom interest rates promise tough times. The index nonetheless remained close to eight-month highs.

The top gainers in Europe were energy shares, up 0.7 percent, as oil prices rose, even though many market participants remained doubtful producers would reach a deal to freeze output.

Euro zone government bond yields fell as some investors bet the weak U.S. data, which followed weaker-than-expected jobs numbers on Friday, would pressure the European Central Bank to ease monetary policy further. Then ECB meets on Thursday.

“With a September rate hike looking less likely to happen, the ECB might be more pressured to come up with a decision this week on further measures,” said Benjamin Schroeder, senior rates strategist at ING.

In Asia, MSCI’s main Asia-Pacific stock index, excluding Japan was up 0.2 percent, having earlier touched its highest since July last year. This helped lift MSCI’s all-country world index to its highest since August 2015.

“When people think there’s no immediate rate hike from the Fed, then Asia and emerging markets are the place to go to, as investors seek yields,” said Toru Nishihama, senior economist at Dai-ichi Life Research.

Japan’s Nikkei index , however, retreated 0.4 percent as a strong yen hurt exporters.

DOLLAR, OIL

The dollar was last down 0.5 percent at 101.50 yen <JPY=>, having fallen as low as 101.18, its weakest since Aug. 16.

The dollar fell 1 percent against several major currencies on Tuesday after Institute for Supply Management data showing activity in the U.S. service sector slowed to a 6 1/2-year low in August and diminished already slim prospects for a Fed rate hike this month.

The dollar index, which measures the greenback against a basket of major currencies was flat. The euro was down 0.1 percent at $1.1245 while sterling, which topped $1.34 for the first time in seven weeks on Tuesday after the ISM data, pulled back 0.2 percent to $1.3412.

“Clearly, this is a challenging environment for the dollar,” said Petr Krpata, currency strategist at ING.

The Swedish crown rose around 0.2 percent to 9.52 per euro after the Swedish central bank kept interest rates unchanged, as expected.

Oil prices, which have been on a rollercoaster in recent days as expectations of whether a deal to curb a global glut can be reached have waxed and waned, edged up.

Brent crude, the international benchmark, gained 35 cents to $47.61 a barrel. It rose as high as $49.40 on Monday, having fallen to $45.32 on Sept. 1.

The reduced expectations of a Fed hike also lifted other commodities. Copper hit a two-week high at $4,683 a ton, while gold hit a 2 1/2-week peak above $1,352 an ounce before pulling back.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

Greece and China Create Small World Market Impact

The rejection of the Greek referendum and a massive stimulus action by China are not hitting all world markets as much as feared except in the area of oil.

U.S. crude oil fell over 7 percent to $52.53 a barrel, the lowest level since April.  Brent crude, the world standard, fell over 6 percent to $56.50.  The markets were hit with pressure from the Greek and Chinese situations plus Iran is preparing to flood the market after sanctions get lifted from a potential nuclear deal.

“Even without Greece, China’s stock market woes and Iran priming to hit the market with more barrels, the demand picture in oil has only been okay while the supply picture has been phenomenal,” said John Kilduff, partner at New York energy hedge fund Again Capital, told CNBC.  “With these number of bearish elements weighing on the market now, the only thing of support has been the seasonal demand in gasoline, and even that will be going away soon.”

American stock markets were down after the Greek “no” vote but not as much as feared by analysts.

The Dow ended the day down 47 points or 0.3%.  The S&P 500 as down 0.4% and Nasdaq was down 0.3%.

“There’s been no panic of any kind,” Paul Hickey, co-founder of Bespoke Investment Group told clients according USA Today. “The market remains faithful that the European Central Bank and other European institutions have done an adequate job firewalling the eurozone against Greece.”

The resignation of the Greek finance minister Monday is believed to have helped mute the impact of the Sunday referendum.