World stock markets push higher on Fed focus
World stock markets mostly rose yesterday following a forecast-busting US jobs report that looks set to prompt an interest hike this week from the Federal Reserve. The pound advanced amid speculation that Britain could trigger as soon as today the formal process for exiting the European Union. Sterling held onto its gains despite the announcement by Scotland’s nationalist government of plans for another independence vote.
In the United States, Friday’s employment report reinforced a long-running belief the world’s top economy was on a strong growth track and focus is now on the conclusion of the central bank’s policy meeting tomorrow.
In a busy week for global monetary policy, the Japanese and British central banks also meet this week. “Another rate hike could be just days away, indeed, given the way the Fed’s policymakers have been talking, it is practically a certainty at this point,” said Chris Beauchamp, chief market analyst at IG trading group.
“Friday’s jobs report reinforced the narrative, but the key now will be what the statement and press conference say.” The dollar wobbled yesterday as some traders took out their profits before the Fed meeting.
“Markets are already fully priced for a Fed rate hike on Wednesday,” said Janu Chan, a senior economist at St George Bank in Sydney. Most stock markets in Asia started the week on a high-tracking all three main Wall Street indicesafter the Labor Department said the US economy created 235,000 new jobs in February, much more than estimated.
US flatlines before Fed
US markets opened flat. “US stocks are hovering around the flatline in early action ... amid heightened Fed rate hike expectations for Wednesday and ramped up political uncertainty in Europe,” said analysts at US brokerage Charles Schwab. But oil prices continued to suffer following last week’s losses of about nine percent in both main contracts, hit by a surprisingly big jump in US stockpiles, increased US shale production and concerns about implementation of a OPEC-Russia led deal to cut output.
“For all the somewhat hopeful talk from industry experts about oil inventories running down later in the year, the fact remains that US shale has come back harder, faster and cheaper than anyone could have imagined,” said Jeffrey Halley, senior market analyst at Oanda trading group.
Modest gains
European stock markets eked out some modest gains yesterday after a strong US jobs report helped Wall Street end last week on a high note. However a welter of potential “event risks” this week kept sentiment in check.
In Europe, Germany’s DAX rose 0.2 percent to 11,985 while the CAC 40 in France added 0.2 percent to 5,002. Britain’s FTSE 100 was up 0.3 percent to 7,362. U.S. stocks were poised for a steady open with Dow futures and the broader S&P 500 futures both up 0.1 percent.
Japan’s Nikkei 225 stock index rose 0.2 percent to 19,633.75 and Hong Kong’s Hang Seng gained 1.1 percent to 23,829.67. South Korea’s Kospi added 1 percent to 2,117.59. The Shanghai Composite index climbed 0.8 percent to 3,237.02, while Australia’s S&P ASX 200 fell 0.3 percent to 5,757.30. — Agencies