Fed Chair Janet Yellen said this week that policy makers are likely to hold key rates... Read More
Futures on the Standard & Poor’s 500 Index advanced 0.4 percent by 8:14 a.m. in London after the gauge capped its best two-day advance since 2011 in New York. The Stoxx Europe 600 Index climbed 0.8 percent and the MSCI Asia Pacific Index jumped 1.8 percent. Oil in the U.S. rose 1 percent after sliding 6.4 percent in the first four days of the week. The euro bought $1.2289 while the ruble strengthened to less than 60 per dollar. Wheat dropped 1.7 percent.
The Bank of Japan held monetary policy steady today, almost two months after unexpectedly boosting stimulus amid a recession in Asia’s second-largest economy. The
MSCI All-Country World Index is headed for its steepest weekly advance since the end of October after the Federal Reserve pledged patience on raising U.S. interest rates and as Switzerland’s central bank introduced negative deposit rates. Russian President Vladimir Putin said the country can withstand an economic downturn as plunging oil prices undermine the ruble.
“We’re seeing a relief rally,” said Koichi Kurose, who oversees about 6 trillion yen ($50 billion) as Tokyo-based chief market strategist at Resona Bank Ltd. “The Fed saying they won’t move toward tightening soon, and Putin saying Russia won’t end up in financial turmoil has helped to alleviate fears. While we’re still concerned as to how low oil prices can go, for now it has rebounded, which is good for risk sentiment.”
Patience Pledge
Fed Chair Janet Yellen said this week that policy makers are likely to hold key rates near zero at least through the first quarter, even as the U.S. economy strengthens. The central bank, in a statement after its last meeting of 2014, replaced a reference to borrowing costs staying low for a “considerable time” with a pledge to be patient on the timing for higher rates.All 10 industry groups advanced on the MSCI All Country World Index, which is up 2.2 percent for the year. A measure of emerging market shares climbed 0.9 percent today, heading for its first weekly gain in three weeks.
Atos led gains on the Stoxx 600, surging 6.5 percent after the French computer-services provider agreed to buy Xerox Corp.’s information-technology outsourcing business for $1.05 billion, almost tripling its business in the U.S.
In the Asia Pacific, the S&P/ASX 200 Index climbed 2.5 percent in Sydney, its biggest one-day gain since July 2013 as banks rallied.
Hong Kong’s Hang Seng Index climbed 1.3 percent and a gauge of Chinese shares in the city advanced 0.6 percent. BYD Co., a Chinese carmaker partially owned by Warren Buffett, surged 14 percent after a record drop yesterday. The company said it confirmed with shareholder Berkshire Hathaway Inc. that it has no present intention to reduce its stake.
Fed Rally
U.S. investors celebrated a reprieve from energy angst and Russia with the biggest post-Federal Reserve rally in three years. The S&P 500 surged 4.5 percent in the last two days, erasing four-fifths of the seven-day decline that began Dec. 5 and wiped out about $1 trillion of equity value. The gauge pulled within 1 percent of its all-time high as Apple Inc., Berkshire Hathaway and Johnson & Johnson led the advance.After two weeks in which traders grew obsessed with headlines about OPEC and Russia’s central bank, the rally was ignited by a more familiar institution: Janet Yellen’s Federal Reserve. More than 500 points has been added to the Dow Jones Industrial Average in the nearly nine hours U.S. exchanges have operated since she pledged patience in raising interest rates.
Should it continue, the recovery would mark the fifth time this year that the S&P 500 has come back after falling more than 4 percent from a high. In comparable drops beginning in January, April, July and September, the index needed about a month to erase losses, data compiled by Bloomberg show.
Oil Pares
Gold added 0.1 percent to $1,200.10 an ounce on the spot market after climbing 0.7 percent yesterday. The precious metal is down 1.8 percent this week.West Texas Intermediate oil climbed to $54.37 a barrel after sinking to the lowest settlement level since May 2009 yesterday. WTI is still down 44 percent this year. Brent crude added 0.2 percent to $59.39 a barrel in London.
The yen slumped more than 2 percent versus the greenback through the previous two days, as the Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, touched its highest level since March 2009 yesterday. Japan’s currency was down 0.4 percent at 119.29 per dollar after reaching its weakest level since Dec. 11 last session.
Japanese bonds rallied after the BOJ announcement, sending two-year yields to a record of minus 0.04 percent and five-year yields declined one basis point to an unprecedented 0.03 percent.
Indonesia’s rupiah climbed 0.4 percent to 12,511 per dollar. The currency, which earlier this week closed at its lowest level since the 1998 Asian financial crisis, is up for a fourth day, the longest winning streak since July.
Euro Low
The euro was about 0.2 percent from the lowest in more than two years against the dollar amid speculation the European Central Bank will expand stimulus measures as the Federal Reserve moves toward raising interest rates.Switzerland’s franc was little changed at 1.20438 per euro and 98.02 U.S. cents after sinking the most in about 18 months yesterday as the nation imposed its first negative deposit rate since the 1970s to stem the tide of money flowing from Russia’s financial crisis.
The ruble climbed 2.6 percent to 59.8950 after weakening 2.1 percent against the dollar last session. It surged 11 percent the day before, as Russian President Vladimir Putin struck an uncompromising stance over the nation’s financial woes. The currency reached a record-low 80.10 per dollar this week.
Wheat futures fell to $6.445 a bushel after climbing as much as 4.4 percent to the highest level since May yesterday. Abdolreza Abbassian, a senior economist at the United Nations’ Food & Agriculture Organization in Rome, said yesterday there were ample global supplies amid concern that Russia may curb shipments because of rising domestic food prices.
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