US stock markets recovered on Wednesday as the dollar fell across the board amid further signs the Federal Reserve will increase economic stimulus over the next six months.
The dollar fell across the board on Wednesday amid signs the Federal Reserve will pump $500billion into the economy over the next six months. Photo: Getty Images
The Fed’s Beige Book survey on regional business on Wednesday said the US economy expanded at a “modest pace” with little sign of acceleration last month, fueling speculation that central bankers could take further measures to support growth.
Jack Ablin, chief investment officer at Chicago-based Harris Private Bank told Bloomberg: “The Beige Book reiterates the call for quantitative easing. The economy is growing, just not accelerating. It remains to be seen what ultimately the Fed buying of bonds will do.”
A report by consulting firm Medley Global Advisors suggested the Fed could start introducing the stimulus as soon as next month, spending $100bn a month on bond purchases. It is understood the Fed has an open-ended commitment to do more over the next 18 months.
The dollar plummeted to its lowest level against the euro since July, and a 15-year low against the yen. The euro was up 1.06pc at $1.395 and the dollar ended at 81.05 yen.
Camilla Sutton, Scotia Capital currency strategist, told Reuters: “We think the dollar will end the year weaker, but for now, we're probably going to be in a period of more subdued trading until we get a firmer idea of where policymakers are headed.”
Meanwhile stocks and commodities recovered after China’s surprise interest rate hike on Tuesday. The Dow Jones industrial average was up 129.35 points, or 1.18pc, at 11,107.97. The Standard and Poor’s 500 Index was up 11.78 points, or 1.05pc, at 1,178.17, with more than 20 companies scheduled to report third-quarter earnings today. The Nasdaq Composite Index was up 20.44 points, or 0.84pc, at 2,457.39.
Key companies driving the market change included Boeing, whose shares rose 3.35pc after posting a quarterly profit that beat Wall Street’s expectations. Delta Air Lines and US Airways Group also surged after reporting strong profits.
Web portal Yahoo! rallied 2pc after announcing late on Tuesday that third-quarter net income had more than doubled to $396.1m, or 29 cents a share.
Wells Fargo, the largest US home lender, climbed 4.28pc after saying it was “eager” to return cash to shareholders following a record quarterly profit.
Lawrence Creatura, a New York-based fund manager at Federated Investors Inc, told Bloomberg: “We’ve had a variety of company earnings reports which indicate that the sky is not falling. Yesterday was a dark day for the market because of macro factors. Today it will be company management teams’ turn to lead the way again.”
http://www.telegraph.co.uk/finance/markets/8077090/Dollar-plummets-on-report-Fed-plans-to-pump-500bn-more-into-economy.html
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