Friday, 25 September, 2015
Stocks Jump With Dollar as Yellen Damps Concern Over Global
All but 14 out of 600 shares in Europe’s benchmark index advanced and futures signaled U.S. equities will halt a three- day decline. The dollar’s biggest gains came versus the euro and gold headed for its steepest drop in more than two weeks.
“The message from Yellen yesterday was that it’s not that bad, and we’re still going to hike,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “That was what the market needed to hear.”
Yellen succeeded in stemming concern that weak U.S.
inflation and a slowdown in China would prevent the Fed from raising interest rates for the first time since 2006 after policy makers kept monetary policy unchanged last week.
Investors will be looking at data on the services industry on Friday for signs of resilience in the economy after a report showed sales of new homes jumped to a seven-year high in August.
Stocks
European automakers and miners led a rebound in stocks from an eight-month low, with the Stoxx Europe 600 Index gaining 3.1 percent at 10 a.m. in London. The gauge has lost 1.3 percent this week in its first back-to-back weekly declines since August. Germany’s DAX Index rose after closing at its lowest level of the year.
In the U.S., Standard & Poor’s 500 Index E-mini futures expiring in December advanced 0.7 percent after the gauge fell for three days, its longest streak in a month. It’s set for a second week of declines after the Fed’s meeting this month stirred up concern slowing growth in China would hurt the global economy.
A gauge tracking the U.S. services industry probably slipped in September, according to economist estimates.
Bonds
Shorter-maturity Treasuries led declines as Yellen revived bets on higher U.S. interest rates. The two-year note yield increased five basis points to 0.73 percent. It had been at 0.86 percent on Sept. 16, the day before last week’s Fed policy decision. Ten-year Treasury note yields climbed three basis points to 2.16 percent.
Yields on similar-maturity German debt rose five basis points to 0.65 percent and Britain’s 10-year gilt yield jumped seven basis points to 1.83 percent.
Traders aren’t convinced a rate increase is a sure thing.
There’s a 49 percent probability the Fed will raise rates by its December meeting. While that’s up from 39 percent on Sept. 22, it’s down from 60 percent odds at the end of August, according to futures data compiled by Bloomberg. The calculation is based on the assumption that the effective fed funds rate will average
0.375 percent after liftoff.
The cost of insuring corporate debt fell for the second time in three days. The Markit iTraxx Europe Index, which tracks credit-default swaps on investment-grade companies, dropped 0.5 basis point to 83 basis points. The Markit iTraxx Europe Crossover Index of credit swaps of non-investment grade companies declined five basis points to 342 basis points.
Currencies
The dollar strengthened against most of its 16 major counterparts. It added 0.8 percent to $1.1137 per euro, set for a 1.5 percent gain on the week. The U.S. currency rallied 0.7 percent to 120.85 yen.
The Bloomberg Dollar Spot Index jumped 1.2 percent this week, the most since the five days through July 17.
South Africa’s rand was the best-performing major currency surging 0.7 percent to 13.7431 per dollar after touching a record low on Thursday.
Brazil’s real rebounded from an all-time low and gained the most in seven years on Thursday as the central bank vowed to act to stem its rout amid doubts the government can shore up the economy. Turkey’s lira climbed 0.3 percent on Friday.
Emerging Markets
The MSCI Emerging Markets Index rose 0.7 percent, paring this week’s drop to 4.6 percent, its first decline in three weeks. Benchmark gauges in Russia, Poland and Hungary advanced at least 0.9 percent.
Hong Kong’s Hang Seng China Enterprises Index added 0.5 percent, its first gain in five days and leaving it down 5.1 percent for the period. The Shanghai Composite Index slumped 1.8 percent, with trading volumes were 32 percent below the 30-day average. Trading on China’s stock market is waning before a week-long holiday shutdown that starts on Oct. 1.
Markets in India and Turkey were closed Friday for a public holiday.
Commodities
Gold for immediate delivery fell 0.9 percent to $1,143 an ounce. The metal closed Thursday at the highest level since Aug.
24 after the biggest surge since Jan. 30.
Copper pared a weekly decline after new home sales in the U.S. rose to the highest in seven years, boosting the outlook for demand in the world’s second-biggest metals consumer. It rose as much as 1.2 percent to $5,110 a metric ton on the London Metal Exchange. It’s still course for the biggest weekly fall since July.
Oil futures rose, heading for a second weekly advance as U.S. inventories posted a second straight decline and Total SA trimmed its 2017 production target and announced further investment cuts and project delays.
WTI crude climbed 0.8 percent to $45.27 a barrel in the second day of gains. Prices are up 1.3 percent this week.
Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163).
Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS).
Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA
This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this email or any information it contains is prohibited.
This information is not, and should not be construed as, a recommendation, solicitation or offer to buy and sell any securities or related financial products. This information does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive it.
You are receiving this email because you are a valued client of Archr.
