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Shares, bonds rally, dollar tumbles after Fed cools taper talk

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LONDON — Shares and bonds rallied globally yesterday and the dollar tumbled after the head of the Federal Reserve signaled the United States central bank may not be as close to winding down its stimulus programme..

LONDON — Shares and bonds rallied globally yesterday and the dollar tumbled after the head of the Federal Reserve signaled the United States central bank may not be as close to winding down its stimulus programme as markets had started to believe.

Reuters

This came despite minutes showing half of Fed policymakers think the programme should stop by the end of this year.

As investors cheered the prospect of ongoing support, risk assets performed strongly.

European bonds from Germany to Greece tracked gains in US debt and European shares FTEU3 opened up almost 1%, pushing MSCI’s world index MIWO00000PUS, which tracks stocks in 45 countries, to its highest in almost a month.

“Ben Bernanke’s comments were taken by the markets as much more dovish so I suspect it will be a good day for risk markets and I don’t expect that to change in the near term,” said Saxo bank Chairman and senior market analyst Nick Beecroft.

“We are still in a bit of a sweet spot for equity markets. The economy is doing well enough to encourage equity markets about future earnings, but not too hot to cause the Fed to remove accommodation.”

The dollar tumbled 1,2% against a basket of major currencies while the euro roared to a three-week high of $1,32085 at one stage, though it was back at $1,3038.

Copper prices gained 3,2% to exceed $7 000 a tonne, hitting a three-week high and extending the previous session’s 1,4% rise as the dollar softened.

Gold climbed 2,4% to a three-week high and was on track for a fourth straight day of gains while US crude oil prices added 0,7% to their highest level since March 2012, extending Wednesday’s 2,9% jump.