Yellen spurs global stock rally as dol­lar tum­bles

The Pak Banker - - MARKETS/SPORTS -

Stocks jumped around the world af­ter Fed­eral Re­serve Chair Janet Yellen re­asserted the cen­tral bank's grad­ual ap­proach to rais­ing in­ter­est rates. Com­modi­ties climbed as the dol­lar ex­tended its worst month in more than five years.

Yellen's sig­nal that weak­en­ing world growth calls for a slow ap­proach to tight­en­ing pol­icy ig­nited gains for shares from Shang­hai to Frank­furt af­ter U.S. eq­ui­ties erased their losses for the year. Di­min­ish­ing prospects for a first-half Fed rate in­crease sent the Bloomberg Dol­lar Spot Index to­ward the lowest since June and drove emerg­ing-mar­ket cur­ren­cies to­ward their best month since 1998. Credit mar­kets ral­lied and U.S. oil gained for the first time in five days.

Futures show traders now see no chance of Yellen chang­ing pol­icy next month and only a 54 per­cent like­li­hood of an in­crease by Novem­ber af­ter she di­aled back some of the com­men­tary made by other of­fi­cials the past two weeks. The Fed chair em­pha­sized dur­ing her ap­pear­ance at the Eco­nomic Club of New York that the cen­tral bank re­mains wary of rais­ing rates amid threats to Amer­i­can growth from a slow­ing global econ­omy.

"We have seen Euro­pean mar­kets broadly head higher on Yellen's dovish note last night," said Michael Hew­son, the Lon­don-based mar­ket an­a­lyst at CMC Mar­kets Plc. "It's the only fac­tor driv­ing them up today."

The MSCI All-Coun­try World Index added 0.8 per­cent as of 10:29 a.m. Lon­don time for a fourth-straight ad­vance. The Shang­hai Com­pos­ite Index gained 2.8 per­cent and Ger­many's DAX Index added 1.6 per­cent. The Bloomberg Dol­lar Spot Index fell 0.2 per­cent.

The Stoxx Europe 600 Index climbed 1.2 per­cent, headed for a 2.1 per­cent ad­vance for March. Com­mod­i­tyre­lated shares posted the big­gest gain of the 19 in­dus­try groups on the eq­uity bench­mark, with An­glo Amer­i­can Plc and Rio Tinto Group ris­ing more than 5 per­cent. En­ergy com­pa­nies re­bounded as oil re­cov­ered.

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