NEW YORK: Global equities rose modestly, with the Dow and Nasdaq at levels not seen since 2008, while the dollar fell on Wednesday, Nov 3 after the Federal Reserve said it would buy $600 billion more in government bonds by mid-2011 in an attempt to boost the anemic U.S. economy.
The December futures contract for the Nikkei 225 stock index trading in Chicago fell 5 points to 9,305.
On Wednesday afternoon, longer-dated U.S. government bond prices fell sharply and commodities rose as the dollar's value weakened before the Fed's decision to buy Treasuries in a move seen as "printing money." A flood of dollars on the market debases the currency's value.
"All in all, it means more dollars. The debt's going to expand. It should lead to a weaker dollar," said Sterling Smith, an analyst at Country Hedging Inc, in Minnesota.
"In general, it's going to be bullish for all commodities. Any commodity that has a good fundamental story is going to have legs on this."
The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.
The U.S. central bank said it would buy about $75 billion in longer-term Treasury bonds per month. It said it would regularly review the pace and size of the program, and adjust it as needed, depending on the recovery's path.
In its post-meeting statement, the Fed described the economy as "slow," and said employers remained reluctant to add to payrolls. It said measures of inflation were "somewhat low."
"I don't think the Fed overdelivered. Strictly speaking, $75 billion a month is less than $100 billion," said Richard Franulovich, senior currency strategist at Westpac in New York.
"Some were suggesting that the Fed may change the 'extended period' language into an even more extended period, but the Fed didn't," Franulovich added. "And beyond June, there's nothing, there is no outlook. I am slightly underwhelmed. The dollar did sell off, but I don't think this spike in the euro has legs."
The dollar fell against a basket of currencies, with the U.S. Dollar Index down 0.51 percent at 76.333.
The euro rose 0.69 percent to $1.4134 after briefly hitting a session peak of $1.42 immediately after the Fed's announcement.
But the greenback remained higher against the Japanese yen in volatile trading after the Fed's statement. The dollar gained 0.62 percent to 81.12.
DOW HIGHEST SINCE SEPTEMBER 2008
U.S. stocks ended higher in volatile trade after the Fed's statement as analysts had already priced in an injection of around $500 billion by the Fed.
The Dow closed at its highest since late September 2008. In perspective, September 2008 is remembered on Wall Street as a painful month, when the credit crisis deepened and Lehman Brothers filed for bankruptcy.
On Wednesday, the Nasdaq finished at its highest mark since June 2008, while the S&P 500 ended at a six-month high.
The Dow Jones industrial average gained 26.41 points, or 0.24 percent, to end at 11,215.13. The Standard & Poor's 500 Index rose 4.39 points, or 0.37 percent, to finish at 1,197.96. The Nasdaq Composite Index gained 6.75 points, or 0.27 percent, to close at 2,540.27 -- just off its intraday high at 2,541.42.
"The Republican victory and quantitative easing are both net positives for the market," said Alec Young, equity strategist at S&P Equity Research in New York.
The MSCI world equity index edged up 0.1 percent to 319.60. Earlier, the index had risen intraday to as high as 320.53, bringing gains this year to about 7.5 percent and posting the strongest level since mid-2008.
In the energy markets, U.S. oil futures settled at $84.69 per barrel -- not far below a six-month intraday high of $85.36. For the day, oil gained 79 cents, or 0.9 percent.
In contrast, spot gold fell $12.75, or 0.94 percent, to $1,344.20 an ounce.
Meanwhile, the 30-year Treasury bond sank nearly 2 full points, falling 1-27/32 in price to yield 4.05 percent -- up sharply from 3.94 percent late on Tuesday. In late afternoon, though, the 30-year bond's yield hit 4.08 percent, the loftiest level since early August.
But the benchmark 10-year U.S. Treasury note gained 3/32, with the yield slipping to 2.579 percent. The 2-year U.S. Treasury note was up 1/32, with the yield at 0.34 percent. - Reuters
The December futures contract for the Nikkei 225 stock index trading in Chicago fell 5 points to 9,305.
On Wednesday afternoon, longer-dated U.S. government bond prices fell sharply and commodities rose as the dollar's value weakened before the Fed's decision to buy Treasuries in a move seen as "printing money." A flood of dollars on the market debases the currency's value.
"All in all, it means more dollars. The debt's going to expand. It should lead to a weaker dollar," said Sterling Smith, an analyst at Country Hedging Inc, in Minnesota.
"In general, it's going to be bullish for all commodities. Any commodity that has a good fundamental story is going to have legs on this."
The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.
The U.S. central bank said it would buy about $75 billion in longer-term Treasury bonds per month. It said it would regularly review the pace and size of the program, and adjust it as needed, depending on the recovery's path.
In its post-meeting statement, the Fed described the economy as "slow," and said employers remained reluctant to add to payrolls. It said measures of inflation were "somewhat low."
"I don't think the Fed overdelivered. Strictly speaking, $75 billion a month is less than $100 billion," said Richard Franulovich, senior currency strategist at Westpac in New York.
"Some were suggesting that the Fed may change the 'extended period' language into an even more extended period, but the Fed didn't," Franulovich added. "And beyond June, there's nothing, there is no outlook. I am slightly underwhelmed. The dollar did sell off, but I don't think this spike in the euro has legs."
The dollar fell against a basket of currencies, with the U.S. Dollar Index down 0.51 percent at 76.333.
The euro rose 0.69 percent to $1.4134 after briefly hitting a session peak of $1.42 immediately after the Fed's announcement.
But the greenback remained higher against the Japanese yen in volatile trading after the Fed's statement. The dollar gained 0.62 percent to 81.12.
DOW HIGHEST SINCE SEPTEMBER 2008
U.S. stocks ended higher in volatile trade after the Fed's statement as analysts had already priced in an injection of around $500 billion by the Fed.
The Dow closed at its highest since late September 2008. In perspective, September 2008 is remembered on Wall Street as a painful month, when the credit crisis deepened and Lehman Brothers filed for bankruptcy.
On Wednesday, the Nasdaq finished at its highest mark since June 2008, while the S&P 500 ended at a six-month high.
The Dow Jones industrial average gained 26.41 points, or 0.24 percent, to end at 11,215.13. The Standard & Poor's 500 Index rose 4.39 points, or 0.37 percent, to finish at 1,197.96. The Nasdaq Composite Index gained 6.75 points, or 0.27 percent, to close at 2,540.27 -- just off its intraday high at 2,541.42.
"The Republican victory and quantitative easing are both net positives for the market," said Alec Young, equity strategist at S&P Equity Research in New York.
The MSCI world equity index edged up 0.1 percent to 319.60. Earlier, the index had risen intraday to as high as 320.53, bringing gains this year to about 7.5 percent and posting the strongest level since mid-2008.
In the energy markets, U.S. oil futures settled at $84.69 per barrel -- not far below a six-month intraday high of $85.36. For the day, oil gained 79 cents, or 0.9 percent.
In contrast, spot gold fell $12.75, or 0.94 percent, to $1,344.20 an ounce.
Meanwhile, the 30-year Treasury bond sank nearly 2 full points, falling 1-27/32 in price to yield 4.05 percent -- up sharply from 3.94 percent late on Tuesday. In late afternoon, though, the 30-year bond's yield hit 4.08 percent, the loftiest level since early August.
But the benchmark 10-year U.S. Treasury note gained 3/32, with the yield slipping to 2.579 percent. The 2-year U.S. Treasury note was up 1/32, with the yield at 0.34 percent. - Reuters
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