US stocks rally with com­modi­ties on stim­u­lus bets; bonds fall

The Pak Banker - - MARKETS/SPORTS -

Riskier as­sets from stocks to com­modi­ties and emerg­ing-mar­ket cur­ren­cies surged as traders warmed to an un­prece­dented pol­icy boost from the Euro­pean Cen­tral Bank.

The Stan­dard & Poor's 500 In­dex capped a fourth weekly gain and closed at the high­est level of the year. Euro­pean eq­ui­ties ral­lied, while de­vel­op­ing-na­tion shares erased losses for 2016. Credit mar­kets jumped and oil led com­modi­ties to a three-month high, while Trea­suries fell for a third week on spec­u­la­tion US rates will rise this year.

Stocks and com­modi­ties con­tin­ued a re­bound from steep losses at the start of the year, with Amer­i­can eq­ui­ties cut­ting losses to less than 1.5 per­cent af­ter fall­ing to a 22-month low a month ago. In­vestor sen­ti­ment in the af­ter­math of the ECB's an­nounce­ments, swing­ing from op­ti­mism the stim­u­lus could boost growth to con­cern the mea­sures would fall short, il­lus­trates the ten­sion in mar­kets and chal­lenges cen­tral banks face in mol­li­fy­ing them af­ter seven years of un­con­ven­tional pol­icy ma­neu­vers.

The ECB's stim­u­lus comes amid grow­ing con­fi­dence that the U.S. econ­omy has averted any threat of re­ces­sion that's boosted bets the Fed­eral Re­serve will stay on course for tighter pol­icy, while China's lead­ers have eased con­cern over their han­dling of the world's se­cond-largest econ­omy. The Fed, Bank of Ja­pan and Bank of Eng­land are all set to meet next week.

"Since the Feb. 11 lows in the equity mar­ket, global re­ces­sion­ary fears have re­ceded, and that has been key," Joe Quin­lan, chief mar­ket strate­gists at U.S. Trust, Bank of Amer­ica Pri­vate Wealth Man­age­ment, said by phone. "What the ECB did yes­ter­day helped that mo­men­tum and that train of thought be­come more in­grained, that they will do what­ever it takes and then some for global eco­nomic ex­pan­sions."

The S&P 500 climbed 1.6 per­cent to 2,022.07 at 4 p.m. in New York, eras­ing a loss for the week and clos­ing at the high­est level since Dec. 31. The in­dex has trimmed a loss in 2016 to 1.1 per­cent. The gauge's close above its 200-day mov­ing av­er­age ended the long­est run below that tech­ni­cal level since 2011. Banks, en­ergy and tech­nol­ogy shares, which have paced the re­bound in eq­ui­ties since midFe­bru­ary, led gains on Fri­day.

While traders are pric­ing in lit­tle chance of a Fed in­crease on March 16, they have boosted the odds for later in the year. The prob­a­bil­ity of a June move is now 51 per­cent, from less than 2 per­cent a month ago, data com­piled by Bloomberg show.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.