Fed
lifts global stocks, dollar; euro near 1999 starting
point
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[January 08, 2015]
By Marc Jones
LONDON (Reuters) - The dollar hit a
nine-year high and stocks worldwide headed for their first back-to-back
rise of the year on Thursday, encouraged by expectations for a U.S. rate
increase and new stimulus this month from the European Central Bank.
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Steadier oil prices also encouraged risk appetite and helped nudge
U.S. and European government bond yields off recent lows. Soft
German data saw the euro weaken to near where it began trading in
1999.
The prospect of more ECB stimulus was bolstered by data on Wednesday
that showed euro zone consumer prices fell in December for the first
time since 2009. Minutes of a Fed meeting released the same day
supported the view it would raise rates this year.
The index which measures the dollar against a basket of six other
major currencies was at its highest since December 2005. The euro
slid to $1.1760, not far from the level where it first traded,
$1.1747.
Europe's stock markets also advanced: London's FTSE rose 1.9
percent, Frankfurt's DAX 1.7 percent and Paris's CAC 40 2.1, the
biggest gain for each in three weeks.
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"It is clear that the shift in language from the Fed very much keeps
alive the idea they could raise rates around the middle of the
year," HSBC FX strategist, Daragh Maher, said.
The return of global risk appetite lifted emerging-market stocks 1.5
percent, saw Russian stocks surge 5 percent and drove down yields on
government bonds from the euro zone periphery.
The latter got a boost on Wednesday when German Chancellor Angela
Merkel said she wanted Greece to stay in the euro zone but made it
clear she expects Athens to live up the conditions of its bailout.
OIL PRESSURE
More evidence the ECB might use its last policy tool - government
bond buying - came from German industrial orders, which fell a
greater-than-forecast 2.4 percent in November.
However, Japan saw household confidence drop below its level before
its central bank ramped up stimulus two years ago. In Britain,
another country which used bond purchases to prop up the economy,
the pound fell to an 18-month low.
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The euro last fetched $1.1770, its lowest since December 2005.
Sterling hovered at $1.5050 down 0.4 percent on the day.
Japan's yen also weakened, which helped Tokyo's Nikkei outperform
its Asian peers. It gained 1.9 percent, versus 1.4 percent for
MSCI's regional index. Wall Street was expected to open 0.8 percent
higher, after snapping a five-day drop on Wednesday.
Oil held around $51 a barrel, after halving in price over the last
six months.
"We believe that the market is testing water to find where the
bottom of crude oil is and it seems for now, $50 is the limit for
Brent," Phillips Futures analyst Daniel Ang wrote in a daily note.
Safe-haven gold dropped back towards $1,200 an ounce as outflows
from the top bullion-backed SPDR fund added to the pressure of the
stronger dollar.
(Editing by Larry King)
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