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October, 27, 2016

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World markets climb higher on Fed uncertainty

LONDON -- World stocks forged higher Tuesday on uncertainty over the future path for U.S. interest rate hikes, while London shrugged off news of surging inflation.

Asian indices advanced as investors weighed the prospect of a U.S. rate increase, and on the eve of key economic growth data in powerhouse economy China.

In Europe, Frankfurt, London and Paris equities also pushed higher, as the faltering U.S. dollar lifted the energy and mining sectors, dealers said.

"Equities are pointing north again today, buoyed by Fed rate hike uncertainty taking the dollar from its highs," said Mike van Dulken, head of research at trading firm Accendo Markets.

"This, along with ... UK inflation data, is helping materials prices — notably Brent crude oil holding above US$51 — and thus energy/miners," he said.

British annual inflation surged to a near two-year high of 1.0 percent in September, official data showed Tuesday, as a tumbling pound raised prices of imported goods and attracted tourists.

Meanwhile a weaker greenback makes dollar-priced commodities cheaper for buyers using stronger currencies, which boosts demand and prices. In turn, that translates into rising revenues, profits and share prices for the broader resources sector.

The gains came amid unease over this week's key events that also include the last U.S. presidential debate and a European Central Bank monetary policy meeting.

Wall Street pulled back on Monday, despite better-than-expected earnings result from Bank of America.

A below-par reading Monday on manufacturing in New York offset news that overall factory production grew for the third time in four months.

While investors globally expect U.S. interest rates will rise by the end of the year, the figures tempered expectations about the pace of rises after December.

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