Europe shares, dol­lar gain as in­vestors look to Yellen

The Pak Banker - - MARKETS/SPORTS -

Euro­pean shares rose on Tues­day, shrug­ging off losses in Asia, while the dol­lar re­gained its foot­ing as in­vestors looked to a speech by Fed­eral Re­serve Chair Janet Yellen for clues to the in­ter­est rate outlook fol­low­ing weak US data.

As Euro­pean mar­kets re­opened af­ter a four-day Easter break, oil dipped be­low $40 a bar­rel with U.S. crude stock­piles forecast to hit record lev­els. This, sig­nalling con­tin­ued low lev­els of in­fla­tion, helped push low-risk gov­ern­ment bond yields down. But the fo­cus was on Yellen, who was due to speak be­fore the Eco­nomic Club of New York at 1530 GMT. Weaker-than-ex­pected U.S. con­sumer spend­ing data on Mon­day prompted an­a­lysts to sug­gest the U.S. cen­tral bank would be cau­tious about rais­ing rates this year. Fed pol­i­cy­mak­ers ear­lier this month pro­jected two rises in 2016, with some say­ing the first could come next month. "Af­ter the op­ti­mistic com­ments we had from other Fed of­fi­cials in the re­cent past, we ex­pect Yellen to be more bal­anced com­pared to a very dovish Fed state­ment," said Yu­jiro Gato, cur­rency strate­gist at No­mura. "Clearly that will be a driver for the dol­lar today."

The pan-Euro­pean Eurofirst 300 .FTEU3 stock index rose 0.6 per­cent, with in­sur­ers among the gain­ers af­ter pos­i­tive bro­ker com­ments.

The index is down some 8 per­cent in 2016 af­ter a tur­bu­lent quar­ter on fi­nan­cial mar­kets trig­gered by con­cern over the health of the Chi­nese econ­omy, un­cer­tainty over U.S. rates and sharp fluc­tu­a­tions in the price of oil and other com­modi­ties.

Bri­tain's FTSE 100 index .FTSE added 0.8 per­cent, MSCI's broad­est index of Asia-Pa­cific shares out­side Ja­pan .MIAPJ0000PUS slipped 0.4 per­cent. Aus­tralian shares fin­ished about 1.6 per­cent lower while Tokyo's Nikkei . N225 closed 0.2 per­cent lower as the week U.S. data rat­tled sen­ti­ment to­wards ex­porters. China's blue-chip CSI300 index .CSI300 closed down 1.1 per­cent and the Shang­hai Com­pos­ite Index .SSEC lost 1.3 per­cent.

The dol­lar, which slipped on Mon­day on the soft data, rose 0.2 per­cent against a bas­ket of cur­ren­cies .DXY. Mor­gan Stan­ley said its po­si­tion­ing data showed the mar­ket was its most short dol­lars since June. The euro EUR= fell 0.1 per­cent to $1.1178 while the Ja­panese yen JPY= fell 0.2 per­cent to 113.62. Spec­u­la­tion of more mone­tary stim­u­lus and talk that Ja­panese Prime Min­is­ter Shinzo Abe might de­lay an un­pop­u­lar sales tax hike and call a snap elec­tion kept the yen un­der pres­sure, though Abe in­sisted on Tues­day that nei­ther op­tion was planned.

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