LONDON – World markets rose Monday as concerns that U.S. borrowing costs may be increased later this year diminished ahead of a testimony by Federal Reserve chairman Ben Bernanke.
Worries about the debt crisis afflicting Greece reined in the advance in Europe, especially in light of the big gains seen earlier in Asia.
In Europe, the FTSE 100 index of leading British shares was up 22.09 points, or 0.4 percent, at 5,380.25 while Germany’s DAX rose 14.03 points, or 0.3 percent, to 5,736.08. The CAC-40 in France was 8.94 points, or 0.2 percent, higher at 3,778.48.
Earlier in Asia, stocks were in demand after strong economic growth figures from Thailand and Taiwan.
Jane Foley, research director at Forex.com, said the loss of momentum during the European session was largely to do with nervousness among investors over the euro’s future despite reasssuring comments from the Greek government.
“Looking beyond the immediacy of Greece’s current budget problems, the market is wary about the ability of the eurozone to sustain itself without strengthening fiscal ties,” said Foley.
By early afternoon London time, the euro was down 0.1 percent at $1.3620 — above last week’s nine-month low of $1.3444.
Investors will be particularly interested to see if the Greek government announces a sizable bond issue some time this week as it looks to roll over debt payments due soon.
Elsewhere, the focus in the markets will likely be Bernanke’s testimony to U.S. lawmakers on Wednesday and Thursday.
In particular, investors will be interested to hear what Bernanke says about last week’s decision by the Fed to raise its discount rate by a quarter of a percentage point to 0.75 percent. The discount rate is the rate banks pay for emergency loans from the Fed.
The discount rate rise last Thursday stoked some fears in the markets that the Fed was paving the way for possible increases in its benchmark funds rate later in the year. But the news that inflation remained extremely subdued in January coupled with comments from Fed officials suggest that the benchmark rate may not actually rise this year.
“No sooner had the Fed raised its discount rate by 25 basis points last week before a whole host of Fed officials lined up to reassure investors that the decision was by no means a precursor to a marked tightening in policy,” said Neil Mellor, an analyst at Bank of New York Mellon humidifier.
“Amidst unrelenting talk of tighter policy globally in 2010, the episode is a reminder of just how cautious officials have become — and for good reason,” Mellor added.
Nevertheless, there is a growing optimism that the recovery, at least in the U.S., is on a sure footing and that has helped stock markets eke out further gains over the last couple of weeks — further earnings statements from retailers such as Macy’s Inc., Target Corp., Home Depot Inc. and Gap Inc. will be pored over. The reports should provide clues about the strength of a rebound in consumer spending, which accounts for more than two-thirds of economic activity.
Last week, the Dow Jones industrial average rose for the second straight week, posting its best weekly performance since early November after a string of strong earnings and economic reports.
Wall Street was poised for modest gains later — Dow futures were up 49 points, or 0.5 percent, at 10,427 while the broader Standard & Poor’s 500 futures rose 5.5 points, or 0.5 percent, to 1,111.70.
Earlier in Asia, Japan’s Nikkei 225 stock index jumped 276.89, or 2.7 percent, to 10,400.47 after earlier surging more than 3 percent. Hong Kong’s main index climbed 483.25, or 2.4 percent, to 20,377.27. Only Chinese shares lost ground, with the main Shanghai index retreating 0.5 percent in the first day of trade after weeklong Lunar New Year holidays.
Elsewhere in Asia, South Korea’s market rose 2.1 percent, while Australia’s market closed up 1.8 percent and Taiwan’s market gained 1.6 percent
Benchmark crude for March delivery was up 19 cents at $80 a barrel.
____
AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.
World markets up as Fed rate hike talk diminishes
No comments:
Post a Comment