Dollar Tumbles, Commodities Soar, on Bernanke’s Comments |
Equities
Upbeat GDP data from China lifted Asian stocks, as the economy grew at 9.5% during the last quarter. The Shanghai Composite led the gains, rising 1.4%, followed by the Hang Seng, which advanced 1.2%. Japan’s Nikkei and the Australian ASX 200 both rose a modest .4%, and the Kospi climbed .9%.
In Europe, the major indexes snapped a 3-day losing streak, as the DAX climbed 1.3%, the FTSE rose .6% and the CAC40 added .5%. Auto makers were amongst the top gainers, rising 2.4% after Morgan Stanley raised its outlook for the sector.
Likewise, US markets rose moderately, boosted by Bernanke’s remarks that the economy still needs support from the Fed. The Dow tacked on 45 points to 12492, the Nasdaq rose .5%, and the S&P 500 gained .3%.
Netflix shares gained 2.6%, as investors cheered a significant price hike in the company’s movie streaming service.
Treasuries and Commodities
US bonds inched up slightly, with the 10-year note up 1/32 to yield 2.87%, and 30-year notes up 4/32 to yield 4.16%. Longer term German bonds tumbled, as 30-year notes fell 1.23 to yield 3.43%.
A $21 billion auction in 10-year notes had a high yield of 2.918%, and a bid-to-cover ratio of 3.17.
Metals soared, as gold hit a new record high of 1590.80, and silver surged 6.7% to 38.035. Investors bid up the precious metals as the European debt troubles, coupled with further quantitative easing, raised the appeal of physical investments.
Gold Climbs to New Record High
Crude oil rose .4% to 97.86, while gasoline futures rallied 1.4%, following a larger than expected drop in oil inventories.
Wheat soared 6.3%, and cotton gained 3.9%, as a weak dollar pushed up the price of commodities.
Currencies
Bernanke’s comments sent the US Dollar tumbling. The Swiss Franc soared 1.4% to .8178, settling at a new record high, and the Australian Dollar surged 1.5% to 1.0761. The Euro advanced 1.2% to 1.4141, despite Fitch’s downgrade of Greece’s long term debt to junk status. The Pound rose 1.1% to 1.6105, and the Canadian Dollar gained .6% to .9598.
Economic Outlook
Import prices fell for the first time in a year, dropping .5%, thanks to a steep drop in oil price. Weekly mortgage applications fell for a 4th straight week, despite falling interest rates.
Thursday’s reports will include PPI, Retail Sales, Business Inventories, weekly unemployment claims, and Money Supply.
Earnings are due from JP Morgan and Google.
-Bradley Welcher
About the author: BinaryOptionStrategy- David Frank
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