U.S. inflation is still below the Fed target, Janet Yellen, chair of the U.S. Federal... Read More
The Stoxx Europe 600 Index gained 0.8 percent at 6:35 a.m. New York time, S&P 500 futures (SPX) climbed 0.4 percent and Treasuries rose for the first time in three days. Norway’s krone jumped 1.2 percent versus the dollar and the franc added
0.3 percent, while the pound also strengthened as Scots went to the polls for a referendum on independence. The South Korean won led a decline in Asian currencies and equities in the region also fell. Copper dropped 0.4 percent.
While Fed officials increased their estimates for future borrowing costs, they yesterday retained a pledge to hold interest rates near zero for a “considerable time” after asset purchases end. Central banks in Switzerland and Norway kept policy unchanged, while the European Central Bank allotted 82.6 billion euros ($106.4 billion) of targeted long-term loans to banks. Chinese policy makers cut the rate on repurchase agreements after new home prices fell in 68 of 70 Chinese cities in August from a month earlier.
“There’s this necessary trade-off taking place, keeping the idea that we’re moving to a time where rates go higher but at the same time the Fed is playing down people’s fears,” said Neil Mellor, a currency strategist at Bank of New York Mellon in London. “We’re creeping forward to the time when rates go up.”
Stocks Advance
The Stoxx 600 rose for a second day after yesterday’s 0.5 percent increase. Bayer AG led chemicals companies higher after saying it will spin off its plastics unit, jumping 5 percent. Swiss pumpmaker Sulzer AG advanced 9.4 percent after saying it’s considering expanding its energy industry equipment business through a potential merger with Dresser-Rand Group Inc.Deutsche Lufthansa AG dropped 0.9 percent after HSBC Holdings Plc lowered its rating on the airline, while Telefonica Deutschland Holding AG slid 3.5 percent after a Goldman Sachs Group Inc. downgrade.
Futures on the S&P 500 expiring in December advanced after the index increased 0.1 percent yesterday, closing 0.3 percent away from its record. The U.S. 10-year yield fell one basis point to 2.61 percent.
The Fed tapered monthly bond buying by $10 billion for a seventh time, staying on course to end the program as soon as next month. Officials increased by 25 basis points their median estimate for the federal funds rate by the end of 2015 and said it’ll be at 3.75 percent at the end of 2017.
Considerable Time
U.S. inflation is still below the Fed target, Chair Janet Yellen said after the meeting of officials. The pledge to hold interest rates near zero for a “considerable time” after asset purchases end isn’t a form of calendar-based guidance, she told reporters.A report at 8:30 a.m. in Washington will show initial jobless claims fell to 305,000 in the week ended Sept. 13 from 315,000 in the previous period, according to a Bloomberg News survey of economists. Housing starts probably fell in August, another release may show.
The krone surged at least 0.7 percent versus all of its 31 major counterparts as the central bank kept its benchmark rate unchanged and said it will start raising rates after 2015. It rallied to 6.3709 per dollar and gained 1.1 percent to 8.2065 per euro.
Scots Vote
Switzerland’s franc climbed as the nation’s central bank kept its interest-rate target range at 0 to 0.25 percent at its policy review today. There was speculation policy makers would introduce negative deposit rates in the run-up to the meeting, according to notes by strategists at Citigroup Inc. and Bank of America Corp. before the decision. The currency appreciated to 93.80 centimes against the dollar and strengthened 0.2 percent to 1.20813 per euro.The pound advanced 0.2 percent to $1.6315. Most polls yesterday showed the anti-independence Better Together group backed by Prime Minister David Cameron and the main U.K. parties leading the “yes” campaign. The FTSE 100 Index of shares gained 0.5 percent. Yields on 10-year gilts rose five basis points to 2.56 percent.
Emerging Markets
Malaysia’s ringgit fell to a four-month low of 3.2460 per dollar after the central bank kept its interest rate at 3.25 percent. South Korea’s won dropped as much as 0.8 percent to 1,043.32 per dollar, the weakest since April 16.The MSCI Emerging Markets Index slid 0.4 percent, with Turkey’s benchmark gauge dropping 1.3 percent and Korea’s Kospi losing 0.7 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong retreated 0.9 percent, after rallying the most in two weeks yesterday. The Shanghai Composite Index added 0.4 percent.
China’s home prices declined in cities including Beijing and Shanghai, the National Bureau of Statistics said in a statement today. The People’s Bank of China sold 10 billion yuan ($1.6 billion) of 14-day contracts at 3.5 percent today, according to its website. That’s down from 3.7 percent at a Sept. 16 auction.
The S&P BSE Sensex advanced for a second day, climbing 1.8 percent, the most in two months, on optimism trade ties with China will attract foreign inflows to India. Prime Minister Narendra Modi will host Chinese President Xi Jinping for talks in New Delhi after the two leaders witnessed the signing of more than $3.4 billion in agreements yesterday.
The Bloomberg Commodity Index (BCOM) declined 0.4 percent. Copper retreated for the first time in three days to $6,903 a metric ton and aluminum dropped for a second day to $1,989.50 a ton. China is the biggest buyer of industrial metals.
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