Global stocks, euro gain as Fed meeting begins

NEW YORK Wed Jan 30, 2013 2:47am IST

1 of 8. Traders work on the floor of the New York Stock Exchange, January 18, 2013.

Credit: Reuters/Brendan McDermid

Stocks

   

NEW YORK (Reuters) - Stock markets around the world rose and the dollar fell to a 14-month low against the euro on Tuesday amid rising risk appetite as the Federal Reserve began a two-day policy meeting in which it is expected to maintain its easy monetary policy.

A report that showed U.S. single-family home prices rose in November, building on a string of gains that point to a housing market that is on the mend, added to investor optimism on economic growth.

Still, investors were cautious about making big bets, given mixed U.S. economic data, the run-up in stocks in recent weeks and risk in the form of a slew of economic reports for the rest of the week, as well as the Fed meeting.

Markets were initially weaker on a report showing U.S. consumer confidence dropped in January to its lowest in more than a year.[ID:nL1N0AY5B0] But that same data kept alive expectations the Fed will maintain its ultra-easy monetary policy for the foreseeable future.

"There is a serious split between the attitudes of consumers and the attitudes of the markets," said Joseph Trevisani, chief market strategist at WorldWideMarkets, in Woodcliff Lake, New Jersey, after the consumer confidence data. "This may make for a weaker dollar as it makes it less likely the Fed will contemplate an early removal of QE," referring to the central bank's debt-buying program called quantitative easing.

The euro extended gains versus the dollar, breaking above key resistance to hit a 14-month high. It last traded at $1.3491.

STOCKS GAIN

The Dow Jones industrial average .DJI gained 72.49 points, or 0.52 percent, at 13,954.42. The Standard & Poor's 500 Index .SPX was up 7.66 points, or 0.51 percent, at 1,507.84. The Nasdaq Composite Index .IXIC was down 0.64 points, or 0.02 percent, at 3,153.66.

"A move like this in one month is extraordinary, and keeping the gains going will depend on concrete news like earnings and data that show the economy is getting better," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "We haven't seen enough of that to make people jump in after the rally we've had."

Recent gains in stocks have largely come on a strong start to the corporate earnings season, and that trend continued on Tuesday with positive results from both Valero (VLO.N) and Pfizer Inc (PFE.N).

European stocks scaled two-year highs, boosted by miners, as optimism about economic recovery gained momentum following the encouraging U.S. home price data and comments on growth in top metals consumer China.

The benchmark FTSEurofirst 300 index .FTEU3 was up 0.4 percent. The index is up 24 percent from its June lows.

Gains across Asian markets, led by a big rally in Australian shares, helped to lift MSCI's world equity index .MIWD00000PUS 0.6 percent to a 20-month high.

U.S. DEBT

In the U.S. Treasury debt market, benchmark 10-year yields proved unable to hold above the key 2 percent level touched on Monday, with investors looking ahead to a debt auction later in the day, as well as the Fed meeting.

The benchmark 10-year U.S. Treasury note was down 9/32, the yield at 1.9955 percent.

Debt prices had earlier reversed losses to advance after the U.S. consumer confidence data.

Investors now await the outcome of the Fed meeting on Wednesday. The Fed is not expected to change its stance after deciding only in December to loosen conditions further. However, investors are watching to see if changes in the membership of the policy-setting committee for 2013 could signal a shift in the future.

Gold snapped a four-day losing streak to rise 0.5 percent to around $1,662.60 an ounce, but any hint that the Fed is considering an end to its loose monetary policy would probably send the precious metal down.

Brent crude and U.S. oil prices rose on the U.S. housing data. Brent crude climbed 72 cents to $114.20 a barrel and U.S. crude rose $1.01 to $97.45 per barrel.

(Reporting by Nick Olivari; Editing by Dan Grebler)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Read 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage