Global equities advance on Fed decision

Traders work on the floor of the New York Stock Exchange September 12, 2015. — Reuters picTraders work on the floor of the New York Stock Exchange September 12, 2015. — Reuters pic

NEW YORK, Sept 23 — Global stocks rallied yesterday, with the tech-rich Nasdaq hitting its second straight record, after US and Japanese central banks decided to keep easy-money policies in place.

Among leading bourses, the gains were greatest in Paris and Frankfurt, with both climbing 2.3 per cent, as European and Asian markets had their first opportunity to trade after the Wednesday central bank announcements. 

The biggest winner in the US was the Nasdaq, which rose 0.8 per cent to post a fresh record. US stocks had also risen about one per cent on Wednesday just after the Fed decision.

“With both the BoJ and the US Fed doing nothing to upset the apple cart, the markets got what they wanted,” said Chris Conway, head of research at Australian Stock Report.

“This is a continuation triggered by the Fed meeting,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

On Wednesday the Bank of Japan overhauled its stimulus program to target inflation and held off cutting interest rates further into negative territory.

That was followed in Washington with the Fed keeping the benchmark federal funds rate at an ultra-low 0.25-0.50 per cent. 

Fed Chair Janet Yellen described the US economy as improving, but said she wanted to see more evidence of strength before hiking rates.

“The markets as a whole continue to be very sensitive to the discourse of central banks,” said Thomas Vlieghe, senior portfolio manager at French asset management firm Mandarine Gestion.

“The fact the Fed has confirmed its accommodating approach has boosted appetite for risk,” he added. 

The Fed decision also lent pressure on the dollar, which retreated further yesterday against the euro and most other leading currencies.

Commodity producers rally

The weaker dollar in turn boosted prices of commodities sold in the US currency on international markets, including oil and copper.

That gave a lift to mining giants BHP Billiton and Glencore, up 4.1 per cent and 5.5 per cent, respectively, and Italian oil company Eni, up 1.1 per cent.

US technology shares were strong, with Apple rising 0.9 per cent, Amazon 1.9 per cent and Google parent Alphabet 1.4 per cent. 

Yahoo finished flat, missing the rally that lifted other technology companies, after disclosing that hackers, likely state-sponsored, penetrated its network in 2014, stealing data from some 500 million users.

Dow member Boeing rose 1.0 per cent following a World Trade Organisation ruling that said the European Union had failed to end illegal subsidies for Airbus.

Boeing said that under the ruling, the United States could levy retaliatory duties against the European Union of up to US$10 billion (RM41.07 billion) a year. 

The EU said that it found some of the WTO findings “to be unsatisfactory”, and noted it had the right to appeal the ruling.

Airbus shares in Paris gained 2.0 per cent. — AFP

Leave a Reply