Global stocks and commodity prices rose today, boosted by speculation the US Federal Reserve will maintain a pledge on low rates later in the day and by a report China's central bank will provide the country's biggest banks with fresh loans.
This anticipated stimulus from the world’s two largest economies eclipsed the growing nervousness and uncertainty surrounding tomorrow’s Scottish independence referendum, which most polls suggest is still too close to confidently predict.
Asian and European equities tracked the overnight gains on Wall Street, which saw the Dow hit a fresh record high after the Wall Street Journal's Fed watcher Jon Hilsenrath said the central bank would keep the words "considerable time" in its policy statement, though it might qualify them.
The phrase has become a touchstone in markets for when the Fed might start raising interest rates and dropping it would be taken as a hawkish step. Dealers said commodities were also boosted by reports that the People's Bank of China would provide 500 billion yuan in short-term funding to the country's top five banks. Copper chalked up its biggest gain in almost a month. "There is no overwhelming need to come across all hawkish yet and whilst a return to some kind of normality is expected at some stage the Fed is unlikely to take any chances which could negatively impact economic growth in the short term," said Gary Jenkins, chief credit strategist at LNG Capital.
“For this particular recovery, I think that the Fed would rather act a little bit too late than a little bit too early,” he said. In early trading the FTSEuroFirst 300 index of leading European shares was up 0.5 per cent at 1386 points, while Germany’s DAX and France’s CAC 40 were also up a similar amount.
Britain's FTSE 100 was higher, but lagging its peers, trading around a quarter of one percent higher. Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose two thirds of one percent, but Japan's Nikkei slipped 0.1 per cent.
Wall Street had ended yesterday strongly in the wake of the Fed talk, with the Dow gaining 0.59 per cent, the S&P 500 0.75 per cent and the Nasdaq 0.75 per cent. The feelgood factor also spread through emerging markets. Russian stocks slid, however, dragged down by a near 30 per cent crash in shares in the holding company of conglomerate Sistema after its chairman was placed under house arrest accused of money-laundering.
Reuters
