Global Markets-Stocks rise after Fed minutes; Brent falls
New York (July 9) Stocks rose on Wall Street on Wednesday, lifting a global equities gauge as the Federal Reserve detailed its plan to allow a strengthening economy to fend for itself, while Brent fell as Libyan oil pumps came back online.
Minutes from the most recent Fed meeting showed the U.S. central bank has begun detailing plans to ease the world's
largest economy out of an era of loose monetary policy, while its asset purchases will likely end in October.
Stocks on Wall Street traded higher after the release of the
minutes and closed near session highs, erasing about half the
losses sustained in the previous two sessions.
"The market, after digesting the Fed minutes, came to the
conclusion that the bond-buying program ending in October is a
sign of economic strength," said Peter Cardillo, chief market
economist at Rockwell Global Capital in New York.
"So while it was a bit more hawkish, the conclusion is the
economy doesn't need any more crutches."
The Dow Jones industrial average rose 78.99 points or
0.47 percent, to 16,985.61, the S&P 500 gained 9.12
points or 0.46 percent, to 1,972.83 and the Nasdaq Composite
added 27.57 points or 0.63 percent, to 4,419.03.
The FTSEuroFirst 300 index of leading European shares was
flat on the day and MSCI's global gauge of stocks
edged up 0.2 percent. U.S. dollar-denominated
Nikkei futures rose 0.6 percent.
European Central Bank President Mario Draghi's speech out of
London didn't alter markets much, as he reiterated his message
that the ECB is ready to use "unconventional instruments" if
needed to support growth.
Brent crude oil hit a one-month low near $108 a barrel after
a Libyan oilfield restarted and supply worries faded, while
weekly data from the U.S. Energy Information Administration
showed U.S. crude stockpiles rose and gasoline demand faltered.
"Gasoline demand didn't grow as expected and that
disappointment is showing in the negative reaction," said Phil
Flynn, analyst at Price Futures Group in Chicago.
Brent fell 0.6 percent to $108.26 and U.S. crude
lost 1.2 percent, the most since late May, to $102.16.
Forex markets took the lack of surprises in the Fed minutes
as maintaining a dovish slant and the U.S. dollar weakened
against a basket of currencies while the euro
strengthened 0.2 percent versus the greenback.
"The minutes reflect a central bank gaining more confidence
in the recovery, and one that is increasingly preoccupied on
matters relating to the exit strategy," Eric Green, head of U.S.
rates and economic research at TD Securities, said in a note.
"These minutes are incrementally less dovish than prior
iterations, but dovish nonetheless."
The benchmark 10-year Treasury note yield was
down slightly at 2.5576 percent after the Fed minutes.
Upbeat U.S. employment data last week prompted some
economists to predict the Fed would raise interest rates earlier
than previously thought, but yields have since fallen.
Gold was up 0.7 percent at $1,328.10 an ounce.