Stocks gain, dollar down as Fed sees gradual tightening

  • Stocks gain, dollar down as Fed sees gradual tightening

Stocks gain, dollar down as Fed sees gradual tightening

The Fed also released the FOMC members' latest interest rate forecasts, which suggested the USA central bank is now expected to carry out two more interest rate hikes during this year for a total of three increases, unchanged from the previous outlook.

EUROPEAN OPTIMISM: Stock markets across the Atlantic rose, with the French CAC 40 up 0.6% and Germany's DAX up 0.5%.

S&P 500 e-minis were up 2.75 points, or 0.12 per cent, with 53,199 contracts traded.

In late morning trading, the dollar index, which measures the greenback against a basket of six major rivals, slipped 0.1 percent to 100.25, after earlier falling to a five-week low.

Globally, gold rose by 0.44 per cent to $ 1,225.10 an ounce and silver by 0.63 per cent to $ 17.43 an ounce in Singapore.

Data on Friday showed a steadily improving USA economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well. It also said that it still plans to raise rates by a total of three times this year, when some investors had been expecting four hikes given the recent pickup in the economy and inflation.

Jeffrey Nichols, senior economic adviser for Rosland Capital, said recent gold trade has been driven in part by tapering momentum in the S&P 500 index SPX, -0.06% and the Dow Jones Industrial Average DJIA, -0.05% which have cooled their record-setting pace lately.

"At the moment, the dollar remains in correction mode, which we had fully expected", said Fawad Razaqzada, market analyst, Forex.com in London. Wilders, like Marine Le Pen in France (http://www.marketwatch.com/story/is-frexit-next-why-france-is-starting-to-really-freak-out-investors-2017-02-07), has expressed an interest in the Netherlands leaving the European Union, something that caused widespread volatility when the United Kingdom voted to do so in June.

The 10-year Treasury yield fell to 2.51 percent from 2.54 percent late Thursday. The central bank's statement and forecasts for future rate increases was seen as less aggressive than had been anticipated. The Bank of England held its interest rates at record lows. PulteGroup rose 1.5% to $23.77, and D.R. Horton rose 1.2% to $33.67.

European shares also rallied, with the pan-European STOXX 600 index climbing half a per cent to its highest level since December 2015 on relief over the Fed's cautious tone, as well as the Dutch election result. USA light crude settled 11 cents lower at $48.75 a barrel.

"Gold, copper and oil all rallied as the dollar dropped".

The pound dipped against the euro this week as the Brexit bill allowing the Government to trigger Article 50 passed through the Houses of Parliament with no amendments.