INTL UPDATE: Europe 30-3-2016


 

30-3-2016——EUROPEAN MARKETS

Stocks and commodities rallied while the USD dollar extended losses Wednesday as Federal Reserve Chairwoman Janet Yellens cautious stance on raising U.S. interest rates rallied risky assets around the world.

Futures pointed to a 0.5% opening gain for the S&P 500.

The Stoxx Europe 600 was up 1.4% halfway through trading in London, following a positive session in Asia with the exception of the Japan’s NIKKEI 225 which fell -224 or 1.3% to 16878.96 on the back of a stronger YEN..

In a speech in New York on Tuesday, Ms. Yellen said global and financial uncertainties posed risks to the U.S. economy and justified a slower path for rate increases.

Wall Street indexes rose to highest closing levels this year, as the prospect of lower interest rates provide support for risky assets like stocks.

USD dollar continues to decline Wednesday. The euro was up 0.4% against the dollar at $1.1327, while the dollar fell 0.4% against the yen to ¥112.3340.

The primary driver for the dollar will be the speed at which Janet Yellen conveys the Fed is likely to raise rates.

Federal-funds futures, used by investors and traders to bet on central-bank policy, showed the probability of a rate increase at the Fed June meeting was 28% after Tuesday speech, down from 38% Monday, according to data from CME Group.

Despite optimism investors will want to see continued improvement in economic data, particularly on the industrial side of the economy.

For developed markets or emerging markets, the big question is growth and the sustainability of that growth.

Also supporting stocks, dollar-denominated commodities such as oil moved higher. U.S. crude rose 1.7% to $38.90 a barrel ahead of oil and fuel inventories data due later in the day, driving gains in shares of energy and mining companies.

Shares in London-based commodities giant Anglo American PLC gained more than 10%, while BHP Billiton PLC and Rio Tinto PLC each rose more than 6%.

Shares in Metro AG added roughly 13% after the German retailer said it is considering dividing into two independent listed companies.

 

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