Mar­kets ad­vance, gold falls on Fed nod to global risks

The Pak Banker - - MARKETS/SPORTS -

Emerg­ing mar­kets ad­vanced, gold re­treated and credit mar­kets strength­ened as the Fed­eral Re­serve's ac­knowl­edg­ment of global risks re­as­sured in­vestors that the pace of in­ter­est rate in­creases could be slowed if mar­ket tur­moil con­tin­ues. US equity fu­tures sig­naled a re­bound from Wed­nes­day's slide.

The MSCI Emerg­ing Mar­kets In­dex rose for a se­cond day. Face­book Inc.'s af­ter-mar­ket bounce spurred gains in fu­tures on the Stan­dard & Poor's 500 In­dex and the Nas­daq 100 In­dex. U.S. crude erased de­clines to head for a three­day ad­vance. Euro­pean stocks slipped as in­vestors weighed earn­ings re­ports. Malaysia's ring­git rose to a seven-week high af­ter Prime Min­is­ter Na­jib Razak main­tained his fis­cald­eficit tar­get.

The Fed's first state­ment since its De­cem­ber in­ter­est-rate hike noted of­fi­cials were "closely mon­i­tor­ing" de­vel­op­ments from China to Europe, for any ad­verse im­pact on the U.S. econ­omy. China's pol­icy mak­ers in­jected more cash into its fi­nan­cial sys­tem to keep bor­row­ing costs from ris­ing as they con­tend with the slow­est eco­nomic growth in a quar­ter cen­tury and record cap­i­tal out­flows that drove the yuan to a five-year low this month.

"The Fed is ac­knowl­edg­ing re­al­ity -- that the out­look has be­come more un­cer­tain -- and is sig­nal­ing that there may be fewer rate hikes," said Shane Oliver, head of in­vest­ment strat­egy in Syd­ney at AMP Cap­i­tal In­vestors Ltd., which over­sees about $120 bil­lion. "It seems cen­tral bankers around the world are start­ing to re­spond, which ul­ti­mately should be pos­i­tive for share mar­kets."

Fu­tures on the Stan­dard & Poor's 500 In­dex rose 0.8 per­cent at 9:31 a.m. in Lon­don. U.S. stocks sank Wed­nes­day amid an Ap­ple Inc.-led slump in tech­nol­ogy shares. Nas­daq fu­tures climbed 1.3 per­cent af­ter Face­book's 12 per­cent surge in ex­tended New York trad­ing. Should the so­cial-me­dia com­pany's af­ter-mar­ket price ac­tion be repli­cated in Thurs­day trad­ing, shares may erase this year's drop.

The Stoxx Europe 600 In­dex dropped 0.2 per­cent. It swung be­tween losses of as much as 0.6 per­cent and a gain of 0.3 per­cent. Deutsche Bank AG slid 1.7 per­cent af­ter post­ing its first an­nual loss since 2008. Hennes & Mau­ritz AB slipped 4.3 per­cent af­ter its fourth-quar­ter earn­ings missed an­a­lysts' es­ti­mates.

En­ergy pro­duc­ers were among the best per­form­ers, with Sead­rill Ltd. and Tul­low Oil Plc climb­ing more than 6 per­cent. Com­mod­i­tyre­lated com­pa­nies also ad­vanced, with An­glo Amer­i­can Plc adding 7.2 per­cent af­ter say­ing cop­per out­put rose 23 per­cent in the fourth quar­ter. The MSCI All World Coun­try In­dex was lit­tle changed. The Kospi in­dex in Seoul ad­vanced 0.5 per­cent af­ter drop­ping as much as 1.1 per­cent. Sam­sung Elec­tron­ics Co. fell 2.6 per­cent af­ter post­ing fourth-quar­ter profit that missed an­a­lysts' es­ti­mates. Aus­tralia's S&P/ASX 200 In­dex climbed 0.6 per­cent.

Ja­pan's Topix re­treated 0.6 per­cent. Et­suro Honda, an eco­nomic ad­viser for Prime Min­is­ter Shinzo Abe, said the na­tion's cen­tral bank needs to boost its un­prece­dented stim­u­lus.

The Bank of Ja­pan is ex­pected to leave pol­icy un­changed at the con­clu­sion of its meet­ing on Fri­day, even amid weak in­fla­tion and ris­ing con­cern over gy­ra­tions in global mar­kets. Thirty-six of 42 econ­o­mists sur­veyed by Bloomberg pre­dict the board to hold fire this week, yet 29 are pre­dict­ing more eas­ing in the fore­see­able fu­ture. The Euro­pean Cen­tral Bank sparked an equity rally last week when Pres­i­dent Mario Draghi sig­naled fur­ther stim­u­lus may some as soon as March.

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