News Column

China trade, US ?budget deal push? world stocks up

February 12, 2014

Global shares were on track to post their longest winning run in five months as they rose for a sixth straight day on Wednesday, boosted by upbeat trade data from China and a US House deal extending the federal borrowing authority.

Chinese exports and imports handily beat expectations in January, confounding market expectations that the world's second-largest economy is mired in a deepening slowdown and reviving appetite for emerging market assets that had been battered in recent weeks.

The cheer spread to Europe, one of China's largest trading partners, where the FTSEurofirst 300 index rose 0.5 per cent. MSCI's index of emerging market stocks added 0.9 per cent , extending its bounce from five-month lows hit earlier this month.

The Australian dollar hit a one-month high on the prospect of stronger demand from China, Australia's largest export market.

The broader MSCI All-Country World Index was up 0.3 per cent in its longest winning streak since September.

Investors also took heart from a strong performance from shares in the US, where Congress agreed to advance legislation extending US borrowing authority and the Federal Reserve's new chief pledged to keep interest rates at ultra-low levels for longer.

Janet Yellen, who chairs the Fed, said the central bank would consider more than the unemployment rate when evaluating the condition of the US labour market, broadening the scope of her predecessor's forward guidance on monetary policy.

A speech by European Central Bank President Mario Draghi will also be in the spotlight on Wednesday. The calmer mood in equity markets was reflected in the VSTOXX index of eurozone equity volatility falling for a sixth day to lows not seen since late January. The VIX index of US stock volatility dived 4.9 per cent to 14.51, pulling sharply away from its recent peak at 21.48.

Among commodities, spot gold snapped a three-day winning streak, giving back some of its sharp overnight gains as stocks rallied. But it was still not far from a three-month high of $1,293.44 hit on Tuesday.

Brent crude edged higher toward $109 a barrel and London copper climbed, reversing losses from the previous session and moving away from a two-month low of $7,016 touched on February. 4.

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Source: Khaleej Times (United Arab Emirates)

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