Global Stocks Rise After Fed Signals Slower Rate Hikes
March 17 2016 - 5:30AM
Dow Jones News
Global stocks and commodities extended gains Thursday while the
dollar continued to weaken after the Federal Reserve signaled a
slower pace for U.S. interest rate increases.
The Stoxx Europe 600 gained 0.3% in early trade, led by the
basic resources sector, after Wall Street closed at its highest
level this year.
Fed officials Wednesday suggested they would likely only raise
rates twice this year, down from earlier projections of four
increases, while offering a cautious outlook on the world economy.
The prospect of lower rates for longer pushed U.S. government bond
yields down, making stocks more attractive in comparison. It also
weakened the dollar, lifting prices of dollar-denominated
commodities. Yields fall as prices rise.
European mining companies gained nearly 5% Thursday as Brent
crude rose 2% to $41.15 a barrel and copper futures in London
gained 1.4% to $5,064 a ton. Shares in Anglo American PLC were up
over 10%, while Glencore PLC gained over 9% and Rio Tinto PLC rose
5% after its chief executive said he would retire in July.
In currencies, the dollar extended its declines Thursday, with
the euro last up 0.5% against the dollar at $1.1265. The buck fell
1% against the yen to ¥ 111.6290.The WSJ Dollar Index, which
measures the dollar against a basket of 16 currencies, fell to its
lowest level since October after the Fed announcement. Lower
interest rates tend to make a currency less attractive to investors
seeking yield.
Gold gained 3.1% to $1,268 an ounce, spurred by a weaker dollar
and the prospect of lower rates.
Earlier, stocks in Asia mostly gained, but Japan's Nikkei Stock
Average ended lower as a stronger yen weighed on shares of
exporters.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
March 17, 2016 05:15 ET (09:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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