- Global Equities Soar to Record High; Dollar Slides
Global stocks hit a record high after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy, while a gauge of the dollar fell to a 10-month low.
Standout markets included the MSCI ACWI Index and Seoul’s Kospi Index, both at all-time highs. Hong Kong’s Hang Seng Index was the strongest in two years after the Dow Jones Industrial Average closed at a record. European stocks opened higher and U.S. index futures rose. Chinese exports grew more than forecast as global demand proved resilient. Australian sovereign debt followed gains in Treasuries after Yellen expressed confidence in the U.S. economy and signaled monetary tightening would be gradual. Oil held above $45 a barrel. Canada’s dollar gained after the first rate hike there in seven years.
“The market is upbeat as Yellen’s comments suggest a slower pace of rate increases and that bodes well for liquidity conditions and stocks,” said Banny Lam, head of research at CEB International Investment Corp. in Hong Kong.
Yellen’s testimony diverted attention from Donald Trump Jr.’s emails about his meeting with a Russian lawyer, though concern remains that the latest saga in Washington may waylay efforts to reform taxes and boost spending. The Fed chair’s gradualist tone on policy came after signals from central banks around the world that accommodative policies may no longer be needed as the global economy strengthens.
These are the main moves in markets:
- The Euro Stoxx 50 Index rose 0.1 percent as of 8:16 a.m. in London, building on Wednesday’s 1.5 percent gain. The FTSE 100 was down 0.1 percent after rising 1.2 percent the previous day, the most since April 24.
- S&P 500 futures were up 0.2. The underlying index advanced Wednesday to just 0.4 percent shy of its closing record. The Dow Jones Industrial Average rose 123 points to a record 21,532.
- The MSCI ACWI Index, which includes emerging and developed world markets, rose 0.2 percent to a record high.
- Hong Kong’s Hang Seng Index climbed 1.1 percent to its highest since July 2015. A gauge of Chinese companies listed in Hong Kong jumped 1.5 percent, while the Shanghai Composite Index gained 0.6 percent.
- Japan’s Topix index was steady after fluctuating. Australia’s S&P/ASX 200 Index strengthened 1.1 percent and the Kospi in Seoul rose 0.7 percent. South Korea’s central bank held its benchmark rate, as expected.
- The yen was up less than 0.1 percent at 113.12 per dollar, after climbing 0.7 percent Wednesday in its biggest gain for more than a month. The won rose 0.8 percent, the most since May 25, to 1,136.35 per dollar.
- The U.S. dollar was down against all G-10 peers. The Bloomberg Dollar Spot Index fell 0.2 percent to its lowest since September 2016. The gauge has lost 0.8 percent this week.
- The pound and euro both climbed 0.4 percent. The Canadian dollar rose 0.1 percent after jumping 1.3 percent Wednesday.
- The Brazilian real jumped 1.4 percent Wednesday after former President Luiz Inacio Lula da Silva was convicted of graft and money-laundering.
- Wheat for September delivery on the Chicago Board of Trade dropped 1.5 percent to $5.29 a bushel, down a second day. The U.S. Department of Agriculture said domestic production will be greater than analysts expected.
- West Texas Intermediate crude was down 0.5 percent at $45.29 a barrel. It climbed 1 percent the previous session after data showed crude inventories fell 7.56 million barrels last week.
- Gold added 0.2 percent to $1,222.99 an ounce, a fourth day of gains.
- The 10-year U.S. Treasury yield was down less than one basis point at 2.32 percent. The yield on Australian government notes with a similar maturity dropped three basis points to 2.69 percent.