Markets advance, gold falls on Fed nod to global risks
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.