Global stocks rally, oil rebounds on Fed remarks

31/03/2016 07:03 AST

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 dollarextended 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 US 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 US 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 per cent 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 0.9 per cent as of 8:15 a.m. New York time, leaving it close to wiping out all its losses for the year to date. Standard & Poor’s 500 Index futures advanced 0.5 per cent, indicating equities will extend Tuesday’s 2016 high. The Shanghai Composite Index gained 2.8 per cent and Germany’s DAX Index added 1.7 per cent.

The Bloomberg Dollar Spot Index fell 0.3 per cent. Stocks The Stoxx Europe 600 Index climbed 1.7 per cent, headed for a 2.5 per cent advance for March.

Commodity-related 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 6 per cent. Energy companies rebounded as oil recovered.

Metro AG jumped 12 per cent after the German retailer said it’s preparing to split in two in a move aimed at boosting its value.

Data from the ADP Research Institute showed an increase of 200,000 US jobs for March, compared with a median estimate of 195,000 by economists in a Bloomberg survey.

The private report is watched as an indicator of the non-farm payroll release due Friday.

Currencies Bloomberg’s dollar index, which tracks the greenback against 10 major peers, has lost 3.7 per cent in March, set for a second straight monthly drop and the biggest decline since September 2010.

The US currency slipped 0.2 per cent to $1.1317 per euro and weakened 0.3 per cent to 112.33 yen as it dropped against all of its major counterparts.

The Gulf Today