Global Market Overview

Last updated: March 6, 2013 9:22 pm

Stocks edge higher on growth hopes

Wednesday 21:10 GMT. Global stocks extended gains as sentiment was boosted by the sight of record levels for Wall Street blue-chips, following optimism over the US economy and expectations of continued stimuli from central banks.

Away from equities growth-focused assets were less upbeat, however. Copper fell 0.7 per cent at $3.48 a pound and Brent crude traded below $111 a barrel for most of the session.

This left so-called commodity currencies muddled relative to the greenback, the Australian dollar rose up 0.1 per cent but its Canadian namesake is off 0.4 per cent, the latter also impacted by a weak Ivey purchasing managers’ survey and after the country’s central bank held interest rates at 1 per cent.

Yet, perceived fixed income havens generally struggled as they lost favour to stocks. Prices for Treasuries and Bunds eased back, forcing yields up 4 basis points to 1.93 per cent and 1bp to 1.46 per cent, respectively.

The FTSE All-World equity index rose 0.2 per cent to 235.8 as it gained support from mildly firm performances in Europe and the US.

But The FTSE Eurofirst 300 closed 0.3 per cent lower on the day after earlier touching a four-year high. In New York, the S&P 500 closed 0.1 per cent higher at 1,541, after paring earlier gains.

Wall Street got some support from a Federal Reserve report of regional economic conditions known as the Beige Book. The survey showed every district of the US central bank system reported growth in January and early February despite tax rises and looming cuts to government spending.

The All-World also received help from a solid Asian session that saw the Nikkei 225 surge 2.1 per cent, Shanghai add 0.9 per cent and Sydney rise 0.8 per cent to a four and a half year high.

The region had its first chance to react to the news that the Dow Jones Industrial Average had surpassed its previous October 2007 peak.

The Dow is a narrow, price-weighted gauge, but its resurgence to pre-crisis levels was symbolic of the market’s renaissance since the March 2009 cyclical low and may also entice more investors into the market, some analysts believe. The index rose another 42 points to 14,296 in the current session.

Providing bullish underpinning to markets were hopes that the US economy is improving – the US service sector grew in February at its fastest pace in a year – but not so fast that the Federal Reserve will look to cut back on its asset buying programme soon.

Markets have been further buoyed on Wednesday by news that the US private sector added 198,000 jobs in February, a stronger-than-expected figure that bodes well for the official non-farm payrolls report released on Friday.

Investors are now watching for other major central bank monetary policy meetings this week. The Bank of Japan, the Bank of England and the European Central Bank hold their policy meetings on Thursday.

Particular attention may be paid to the ECB, which some traders think may be under pressure to loosen policy further to combat a weak regional economy and perhaps help salve concerns about the potential fallout from the inconclusive Italian elections.

The euro fell 0.5 per cent to $1.2991, even though sentiment towards eurozone peripheral debt improved. Rome’s implied 10-year borrowing costs fell 7bp to 4.66, and Madrid’s eased 4bp to 5.02 per cent on the day.

Gold prices rose $8 to $1,583 an ounce.

Additional reporting by Jamie Chisholm in London

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