Markets Get Much-Needed Respite After Fed Announces Decision

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) August 11, 2011 -- Asian stocks rose for the first time in seven days today as trading actually rallied. Oil bounced back from a 10-month minimum after the Federal Reserve committed to keeping interest rates around zero until mid-2013.

The MSCI Asia Pacific Index was up 1.6% as of 9:42AM in Tokyo, finally ending a six-day, 13% slide. Futures on the S&P 500 Index rose 0.2% while yields on 10-year treasury bonds increased by two basis points to 2.23%. The South Korean won jumped up 0.9% to 1,078.35 against the US dollar at the same time that the Australian dollar appreciated 0.3%. September crude oil futures were up 2.4% in trading in New York. Wheat and corn also increased by more than 1%, while bronze won back some of its five-day losses.

The Federal Reserve pledged to keep the key interest rate at its current record-low level and also confirmed that it was discussing a number of monetary policy instruments to prevent another recession, announcing that it was prepared to use such measures “as needed.” Indications that members of the Federal Open Market Committee were taking measures to stimulate economic growth and restore investor confidence helped world stock markets put a stop to their nine-day slump, which destroyed $7.8 trillion in equity.

Analysts polled by Bloomberg say that China and Australia may leave interest rates unchanged until the end of the year, signaling that the world powers will be taking further steps to stimulate growth and restore confidence against global shocks on the market. “Stocks turned out to be oversold amid anxieties over global economic growth,” said Shane Oliver, senior investment strategist at AMP Capital Investors Ltd in Sydney, which manages a $100 billion portfolio.

DT Trading analysts report that the US Treasury is planning to sell $24 billion of 10-year bonds today, as well as $16 billion 30-year debt securities tomorrow. Yesterday’s sale of $32 billion three-year bonds garnered more demand on average than before, not to mention that demand exceeded supply with a coefficient of 3.29. For comparison, the average coefficient for the past ten trading sessions has been 3.15. The Australian dollar moved slightly from $1.0353 against the US dollar. The currency, which yesterday fell below parity with the US dollar for the first time since March, lost all of its earlier gains against the US dollar – 0.6% - after the Westpac Banking Corporation and the Melbourne Institute published research on Australia’s consumer confidence which, according to the report, fell this month to its lowest level in over two years.

Precious metals increased in price on the London Metal Exchange. Three-month bronze futures went up 3.1% to $9005 per ton, whereas the same contract was trading at an 8-month low just yesterday. Nickel and zinc both went up more than 3% to $21,898 per ton and $2,163.50 per ton, respectively.

DT Trading analysts are keeping an eye on today’s biggest news, including publication of a report from the US Department of Energy on weekly changes in oil reserves in US petroleum storage facilities. Data published earlier by the American Oil Institute showed a decrease in both oil and gas reserves. According to forecasts, crude oil reserves should increase to 1.5 million barrels, while gas reserves should drop to a half million barrels at the peak of the vacation season, which means we can still expect oil to continue to rally. The Canadian dollar, Russian ruble, and other commodity currencies are expected to appreciate.

DT Trading Analytical Department

brokerage     CFDs     currency trading     forex     futures     offshore investments     securities     trading platforms