• Busting Uber myths

    The ehailing firm is constantly trying, succeeding - and sometimes failing, says Ian Mann.

  • Trapped in a democracy

    The very people elected to bring benefits to all are undermining SA, says Solly Moeng.

  • Marikana spectre

    Five years after the bloody massacre calls for justice are growing louder, says Terry Bell.


Stock markets enjoy Fed-fuelled rally

Mar 18 2016 16:29

London - World stocks mostly rose on Friday, boosted by the lingering effects of the US Federal Reserve's lower interest rate outlook and firmer oil prices but Tokyo sank as a surging yen hit Japan's exporters.

The Fed's decision earlier this week to peg back its forecasts on hiking rates - citing global turmoil and weak growth - has been greeted with relief across most trading floors.

Frankfurt, London and Paris stock markets were all marginally higher in mid afternoon European trade.

Wall Street opened just shy of half a percent up.

The Fed's announcement on Wednesday has also provided a boost for emerging market currencies and sent the dollar tumbling, which in turn provided a boost to dollar-priced crude oil, which has surged above $40 per barrel.

"Wednesday's dovish note by the Federal Reserve may be continuing to lend support to global equity markets," said analyst Tony Cross at traders Trustnet Direct.

'Rising tide lifts boats'

The prospect of ultra-low interest rates buoys stock markets because it boosts spending in the world's biggest economy, dealers said.

"Lowered interest rate expectations have sent global stock markets higher because low interest rates traditionally encourage spending, the rising tide lifting all boats," said Spreadex analyst Connor Campbell.

He added: "From a specifically US perspective, inaction from the Fed, especially coupled with a fairly dovish outlook, helps temper the dollar."

In Asia, Hong Kong ended up 0.8%, Shanghai closed 1.7% higher and Sydney gained 0.3% by the end. Seoul, Singapore, Taipei and Manila also enjoyed healthy advances.

However, Tokyo finished 1.3% lower as the yen pushed towards levels not seen since late 2014 with the prospect of low US returns and dim global growth making the safe-haven Japanese unit more attractive.

Meanwhile, the strength of the yen has rattled Japanese central bankers who in January announced a shock decision to take interest rates into negative territory as they struggle to kickstart inflation and economic growth.

"There's concern for exporters' earnings," Nobuyuki Fujimoto, a senior market analyst at SBI Securities in Tokyo, said.

"If the yen's trading around 114 to the dollar than companies will expect profits next fiscal year, but when it's 110, most exporters will post losses."

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

equities  |  markets  |  global markets



Company Snapshot

We're Talking About...

Savings Month

It's never too late to start saving. Visit our special issue and add your voice.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The proposal to nationalise SARB will

Previous results · Suggest a vote