A global stock market index hovered near record highs yesterday, wrapping up a week when many of the world's biggest economies either raised interest rates or signalled they might do so, underlining confidence about economic growth and inflation.
The US dollar fell, continuing its slide in the wake of the Federal Reserve’s decision on Wednesday to boost interest rates but maintain a gradual pace of hikes this year.
Investors were also watching a meeting of world finance chiefs in Germany beginning yesterday, where topics such as economic reform, protectionism and exchange rates are expected to be on the agenda.
MSCI’s all-country world stock index was little changed on the day but traded near an all-time high.
The Fed raised rates for the second time in three months on Wednesday, while China followed with its own hike on Thursday, and then Britain and a European Central Bank policymaker hinted at higher rates.
“It looks like the rest of the central banks may be thinking about tightening up a little bit,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
“It confirms that growth is improving both domestically and globally, which is what everyone has been looking for...They wouldn’t be doing that if their economies still needed aggressive monetary stimulus.”
Wall Street's main indexes fell slightly in morning trading. Amgen shares tumbled 6.7 per cent after data on the biotechnology company's cholesterol drug came in at the low end of investor expectations. The Dow Jones Industrial Average fell 6.94 points, or 0.03 per cent, to 20,927.61, the S&P 500 lost 1.64 points, or 0.07 per cent, to 2,379.74 and the Nasdaq Composite dropped 6.50 points, or 0.11 per cent, to 5,894.26.
The pan-European STOXX 600 index slipped 0.1 per cent. European bank stocks touched their highest point in more than a year after a European Central Bank policymaker kindled talk of a possible rate hike.
The ECB will decide later whether to raise interest rates before or after ending its bond purchase programme, policymaker Ewald Nowotny told a newspaper.
The dollar edged 0.1 per cent lower to a fresh five-week low against a basket of currencies. The greenback remained under pressure for a third straight session after the Fed quashed hopes for a further bull run in the currency by keeping a gradual pace to its monetary tightening policy.
Data yesterday showed a steadily improving US economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well.
US Treasury yields edged lower after data showing low inflation in March suggested that the Fed could potentially lower its forecasts for interest rate increases this year.
Prices for benchmark 10-year Treasuries gained 8/32 to yield 2.497 per cent, from 2.524 per cent late on Thursday.
Oil prices firmed slightly and looked set to finish the week with a modest gain after losing almost 10 per cent last week.