LONDON, Aug 18 (Reuters) – World stocks rose and the dollar sank to a seven-week low on Thursday after minutes of the U.S (Other OTC: UBGXF – news).
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Asian shares are on track for their biggest single-day rise in almost two weeks while the greenback retreated after minutes of the U.S. Federal Reserve’s latest meeting showed that the chances of a September rate hike are looking pretty slim.
“No news is good news”, said Subadra Rajappa, head of US rates strategy at Societe Generale.
Market participants interpreted the minutes as moderately positive for risk-taking, with the Fed remaining divided on the timing of the next hike.
MSCI’s 46-country All World index climbed 0.2 per cent to head back towards a one-year high, hauled higher by a 0.5 per cent rise in Asian shares, their biggest rise since August 8.
The pan-European STOXX 600 index, which had fallen in the last four sessions on a run of weak company earnings reports, was up 0.6 percent.
The fall in the dollar dominated currency market moves.
The dollar’s index against a basket of six major currencies.DXY fell to 94.385, its weakest since June 24.
The minutes released on Wednesday showed several policymakers said a slowdown in the future pace of hiring would argue against a near-term hike even as members of the rate-setting Federal Open Market Committee were generally upbeat about the USA economic outlook.
“Members judged it appropriate to continue to leave their policy options open and maintain the flexibility to adjust the stance of policy based on incoming information”, the minutes said.
Several officials wanted to delay the rate increase until they see a clear indicator that inflation would jump to the Fed’s two percent target, while for others, the US economy was close to achieving a full recovery on employment and a rate hike may soon be necessary to prevent the economy from overheating.
“Right now, observers think a September policy rate hike is off the table”, Richard Clarida, global strategic advisor at bond giant PIMCO, wrote in a blog.
The yield on 10-year Australian government debt edged lower to 1.95 percent, about 100 basis points down from end-2015.
The euro was 0.3 per cent higher at US$1.1320, having hit a seven-week high of US$1.13285.
The weaker dollar was an additional help to commodities like crude oil, which extended its rally for a fifth day on Wednesday on an unexpected drawdown in USA crude and petrol. The Wall Street Journal Dollar Index, which measures the US currency against the currency of 16 other countries, was recently down 0.1% at 85.52; the measure was as high as 85.98 earlier in the session.
U.S. crude rose 0.1 per cent to $46.85 a barrel, with their surge slowing after a Reuters report that suggested Saudi Arabia was cranking its crude output to new record highs, even as OPEC talked of ways to ease a global glut.
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Benchmark copper on the London Metal Exchange extended gains to be up 1 percent at $4,824 a tonne after losing 0.8 percent on Wednesday.
