Dollar softening boosts equities, commodities
By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets rose on Thursday as diminished expectations of U.S. interest rate hikes this year pushed the dollar lower, which in turned boosted the prices of many commodities.
The dollar fell for a fourth day on the latest batch of soft U.S. data, while comments from a U.S. Federal Reserve policymaker on Wednesday were viewed as a sign further rate hikes could be delayed.
Those comments were buttressed on Thursday by Robert Kaplan, the new head of the Dallas Fed, who said the central bank should be "patient" on rate increases.
"The big move down in the dollar seems as much about the Fed and the reality that aside from the employment data in the U.S., you haven’t gotten a lot of good news anywhere you have looked," said Brian Nick, head of tactical asset allocation for UBS Wealth Management Americas in New York.
"Even though everybody else is still easing, it seems like the Fed is going to be on hold, our call has moved from March to September, so lower for longer is the word."
The recent weakness in the greenback has provided investors the incentive to take profits in successful trades against commodities and emerging markets, which had suffered after a run higher by the dollar.
The U.S. currency fell 0.8 percent against a basket of major currencies on Thursday and is down 3 percent for the week, on pace for its worst week since May 2009. It hit a 3-1/2 month low against the euro and held close to a two-week low against the Japanese yen.
Oil was volatile, fluctuating between gains and losses, following a sharp climb in the prior session, as investors assessed the potential for talks on a production cut.
Brent settled down 1.7 percent at $34.46 a barrel, after hitting a high of $35.84 earlier in the day, while U.S. crude settled off 1.73 percent at $31.72 after reaching a high of $33.60.
The fall in the dollar also helped push metals higher, with copper and zinc both up more than 1 percent. In turn, that lifted emerging markets, whose economies are highly depending on commodities. The MSCI emerging markets index climbed 2.7 percent.
The Dow Jones industrial average rose 79.92 points, or 0.49 percent, to 16,416.58, the S&P 500 gained 2.92 points, or 0.15 percent, to 1,915.45 and the Nasdaq Composite added 5.32 points, or 0.12 percent, to 4,509.56.
The U.S. gains were led by a 2.8 percent climb in the materials sector. The MSCI World equity index rose 0.8 percent.
European shares dipped, with the pan-European FTSEurofirst 300 index off 0.15 percent, weighed down by a drop of nearly 11 percent in Credit Suisse, which reported a full-year loss. Commodity-related shares surged, however, as the STOXX Europe 600 Basic Resources Index jumped 7.3 percent and the oil and gas index climbed 3.3 percent.
Stocks globally have had a dismal start to 2016, smacked by tepid U.S. growth, falling oil prices and concern over a China-led slowdown on the world economy while the Fed embarked on a tightening monetary policy.
Ten-year U.S. Treasury yields advanced 8/32 basis point to 1.8549 percent.
Gold, was last up 1.1 percent at $1,155.06 after hitting a three-month high at $1,157.20 an ounce.
(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Nick Zieminski)
