World stocks gain ahead of new Fed chief comments
AP and AFP
February 11, 2014, 12:10 am TWN
BEIJING/HONG KONG--Global stocks were mostly higher Monday as investors looked ahead to Janet Yellen's first comments before Congress as the new Federal Reserve chairwoman.
In Europe, France's CAC 40 added 0.3 percent to 4,241.85 and Germany's DAX rose 0.2 percent to 9,322.13. Britain's FTSE 100 added 0.1 percent to 6,576.37.
Futures, however, augured a sluggish start for Wall Street. S&P 500 futures shed 0.3 percent and Dow futures were off 0.2 percent.
The U.S. economy added 113,000 jobs in January, far below the 170,000 analysts had been expecting. But unemployment dipped to 6.6 percent, the lowest rate since the global financial crisis hit in late 2008, and more people sought jobs.
U.S. investors were undeterred by the numbers, with the Dow jumping 1.06 percent Friday, the S&P 500 up 1.33 percent and the Nasdaq 1.69 percent higher.
There had been fears that a disappointing set of numbers could send global markets slumping again after suffering huge sell-offs at the start of the month following weak U.S. and Chinese manufacturing reports and the Federal Reserve's decision to further cut its stimulus.
"The detailed data suggests the U.S. is indeed moving towards a stronger economy," said strategist Evan Lucas at IG Markets in a report.
Investors were looking ahead to Yellen's appearance Tuesday before Congress for signs of whether the Fed might alter its plans to wind down its stimulus.
Rising stock markets suggested some traders think the Fed might postpone another reduction in its monthly bond-buying. But analysts warn that is far from certain.
The Fed had been buying US$85 billion worth of bonds every month in an effort to stimulate the economy by pushing down commercial lending rates. The Fed said in December it will reduce that by US$10 billion each month. That would reduce February's purchases to US$65 billion if the Fed sticks to its plan.
"We think that the data is not weak enough for the Fed to pause on tapering, but also not strong enough to shift the base case of a modest recovery to a faster paced one," said Mizuho Bank in a report.
'Recent market correction may very well be over'