Markets remain buoyed by Dow's new record
- Article by: PAN PYLAS
- Associated Press
- March 7, 2013 - 4:31 AM
LONDON - The positive mood in financial markets showed few signs of abating Thursday ahead of policy statements from Europe's top two central banks.
Wall Street's eye-popping performance this week, which has seen the Dow Jones industrial average strike all-time closing highs on Tuesday and Wednesday, has encouraged optimism across global markets and sent many stock indexes to multi-year highs, too.
"This is typically a moment where most bears capitulate and either withdraw into silent hibernation, or belatedly join a growing band of momentum traders," said Michael Ingram, market analyst at BGC Partners.
In Europe, the FTSE 100 index of leading British shares was up 0.4 percent at 6,455 while Germany's DAX rose the same rate to 7,948. The CAC-40 in France was 0.6 percent higher at 3,798.
Investors in Europe will be keen to see later in the day if the European Central Bank and the Bank of England follow the Bank of Japan's lead and keep monetary policy unchanged.
The ECB is widely tipped to keep its key interest rate unchanged at the record low of 0.75 percent even though the eurozone economy is in recession.
More uncertainty rests with the Bank of England, with a number of economists predicting it will approve an increase in its monetary stimulus program.
"This does seem as if it will dominate the agenda in the hours ahead, even if the direct implications of decisions in Frankfurt and London will have limited fallout for U.S. equities," said Fawad Razaqzada, market strategist at GFT Markets.
Wall Street was poised for a steady opening, with both Dow futures and the broader S&P 500 futures up 0.2 percent.
More attention in the U.S. is focusing on Friday's nonfarm payrolls figures that often set the market tone for a week or two after their release. A better than expected report from private payrolls firm ADP on Wednesday has swelled expectations over the official government data.
The dollar has been buoyant over the past couple of weeks amid rising hopes over the U.S. economy, particularly compared with its major peers, such as the eurozone and Japan.
However, the dollar shed some recent gains against the euro Thursday ahead of the ECB rate decision. The euro was up 0.5 percent at $1.3046.
In Asia, Japan's Nikkei 225 index had its highest close in four years, rising 0.3 percent to 11,968.08. Earlier in the session, it broke through the 12,000 mark as the Bank of Japan wrapped up a two-day meeting without announcing new monetary policy measures. The meeting was the last to be headed by Masaaki Shirakawa, who steps down March 19.
The incoming chief, Haruhiko Kuroda, is expected to ease monetary policy to support the policies of new Prime Minister Shinzo Abe. A former vice minister of finance, Kuroda has long voiced his support for bolder central bank policies and for a weaker currency to help boost export manufacturers by making their products cheaper in overseas markets.
The yen remained in retreat, with the dollar 0.1 percent higher at 94.13 yen.
Elsewhere, Hong Kong's Hang Seng slipped marginally to 22,771.44 while South Korea's Kospi shed 0.8 percent to 2,004.40. In mainland China, the Shanghai Composite Index fell 1 percent to 2,324.29, while the smaller Shenzhen Composite Index lost 1.1 percent to 968.34.
In the oil markets, the price of benchmark New York crude was 21 cents higher at $90.64 a barrel.
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