🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

GLOBAL MARKETS-Stocks rally on rising commodities, weaker dlr

Published 11/16/2009, 02:14 PM
Updated 11/16/2009, 02:18 PM
GC
-
CL
-

* Wall St jumps 1 pct, led by commodity-related stocks

* US crude oil gains over 4 pct on dollar weakness

* US dollar weakens despite Bernanke's FX comments

* Gold hits record high above $1,140/oz

By Walter Brandimarte

NEW YORK, Nov 16 (Reuters) - World stocks rallied on Monday, boosted by stronger commodity prices and a weak dollar, even after U.S. Federal Reserve Chairman Ben Bernanke said the central bank was monitoring the value of the greenback "closely."

U.S. crude oil futures jumped 4 percent as the weaker dollar prompted investors to buy commodities. The greenback slipped on better-than-expected U.S. retail sales data and after Asian and U.S. leaders failed to agree over exchange rates at a summit in Singapore. For details, see [ID:nAPEC]

The dollar pared its losses later after Bernanke said the Fed was monitoring the declining value of the dollar closely as part of its commitment to both jobs growth and price stability. The Fed chief also repeated that interest rates are likely to remain low for "an extended period." [ID:nN16514940]

"Until the world sees actual action, the U.S. dollar will remain in secular decline. But today's comments may be enough to halt the current fall for now," said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.

"Money will go where its best treated, and monetary and fiscal policy in the U.S. is not currently treating the U.S. dollar well, relative to other countries," he added.

U.S. stocks pared gains right after Bernanke's comments, but remained near 13-month highs.

The Dow Jones industrial average <.DJI> gained 156.59 points, or 1.52 percent, to 10,427.06. The Standard & Poor's 500 Index <.SPX> rose 19.33 points, or 1.77 percent, to 1,112.81. The Nasdaq Composite Index <.IXIC> put on 34.41 points, or 1.59 percent, to 2,202.29.

The MSCI all-country world stock index <.MIWD00000PUS> climbed 1.8 percent, while an emerging market stocks index <.MSCIEF> rallied 2.3 percent.

The pan-European FTSEurofirst 300 index of top shares <.FTEU3> closed up 1.5 percent at 13-month highs, also boosted by commodity-related stocks like miners Rio Tinto Plc and Xstrata Plc , which gained 5.5 percent and 7.8 percent, respectively.

"The market is up quite strong, with mining and commodity stocks leading the march. The market keeps shrugging off negative figures, and as long as it does so, it is likely to move higher," said Manoj Ladwa, senior trader at ETX Capital in London.

U.S. crude oil futures soared 4 percent to $79.35 per barrel, also reflecting improved investor optimism about the U.S. economy following October retail sales data.

In a report reflecting gradual improvement in consumer spending, the U.S. Commerce Department said total retail sales increased a better-than-expected 1.4 percent last month, the largest advance since August. [ID:nN16371323]

But the government also revised the September sales data to a 2.3 percent drop from a previously reported 1.5 percent decline.

Bond investors focused on the negative side of the retail sales report -- a more modest rise excluding auto purchases -- to explain their appetite for safer U.S. Treasuries.

The benchmark 10-year U.S. Treasury note added 10/32, bringing its yield down to 3.3843 percent. The 30-year U.S. Treasury bond gained 36/32, with the yield at 4.2912 percent.

DOLLAR SHRUGS OFF BERNANKE

The U.S. dollar continued its decline Monday, after drawing only brief support from Bernanke's comments.

The greenback fell 0.8 percent against a basket of major trading-partner currencies <.DXY>.

Against the Japanese yen, the dollar was down 0.50 percent at 89.26. The euro gained 0.30 percent at $1.4958.

Michael Woolfolk, senior currency strategist at BNY Mellon in New York, said Bernanke indicated that the Fed's mandate is to help keep the dollar strong.

"Still," he added, "Bernanke's remarks indicate that the Fed is unlikely to factor in the dollar's performance regarding the timing of policy decisions."

With U.S. interest rates expected to remain near zero for a prolonged period, appetite for emerging market assets and commodities should remain strong, analysts said.

Gold prices hit a fresh high above $1,140 an ounce on Monday.

The Reuters/Jefferies CRB Index <.CRB> was up 7.91 points, or 2.9 percent, at 277.01.

(Additional reporting by Rodrigo Campos, Nick Olivari and Ellen Freilich in New York, Joanne Frearson in London; editing by Jeffrey Benkoe)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.