Global stocks get central bank boost as Japan’s yen retreats, oil extends rally – FINANCIAL
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Global stocks get central bank boost as Japan’s yen retreats, oil extends rally

The yen retreated 0.8 per cent to 114.13 per dollar, trimming this month's advance to 5.8 per cent. Japan's GDP shrank an annualized 1.4 per cent in the three months ended Dec. 31, following a revised 1.3 per cent gain in the third quarter, official data show.

It’s risk back on, and it is about stimulus.

Stocks in Europe going to the largest two-day gain in more than 4 years, while oil advanced and China’s yuan jumped through the most since a dollar peg was scrapped in 2005, after People’s Bank of China Governor Zhou Xiaochuan expressed faith in the economy. Interest in havens for example gold and the yen declined.

The Stoxx Europe 600 Index continued Friday’s advance as European Central Bank President Mario Draghi said policy makers would act if financial turmoil threatened price stability while giving testimony towards the region’s parliament. Oil rose a second day, while gold fell the most since July. U.S. equity futures climbed with markets closed for that Presidents Day holiday.

The MSCI Asia Pacific Index jumped probably the most since 2009, as the yuan climbed to its strongest level of the year. The Shanghai Composite Index declined as trading resumed following the week-long Lunar Year holiday.

An MSCI gauge of global equities capped a 20 percent slide from a May record last week because the Fed acknowledged the volatility all over the world and signaled it might delay further monetary tightening. China’s central bank is upgrading efforts to restore stability towards the nation’s currency and economy, with Zhou saying there is no basis for continued currency depreciation.

“The Chinese market didn’t react as bad as we feared and with the weak export data there is some big hope the central banks will react quite fast,” said John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva. “It’s a mix of hope of intervention in the Asian central bank, short squeeze and also a relief in some energy and banking sectors, probably the most shorted sectors.”

The Stoxx 600 added 3.1 percent at 5:11 p.m. in London, led by funding in carmakers. West Texas Intermediate crude jumped 1.2 percent and gold dropped 2.6 per cent to US$1,205.23 an oz.


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