Global Markets Shares grind higher, yen edges up on Amari comments

Business & Markets 2013
Written by Reuters
Monday, 20 May 2013 18:40
A + / A - / Reset

LONDON (May 20): Optimism about global growth pushed world
shares to a near five-year high on Monday, while debate about the
future of the U.S. Federal Reserve's stimulus programme extended
gold's longest losing streak in four years.
Data last week that showed U.S. consumer sentiment at its strongest in
nearly six years continued to support equity markets ahead of this
week's forward-looking PMI data from most of the world's top
economies.
MSCI's world shares index, which has been lifted to its highest since
June 2008 by the constant drip of central bank stimulus, was up 0.3
percent by 0925 GMT as small morning gains in Europe kept the run
going. Asian shares also rose earlier.
"We have started to see a series of positive readings coming out of the
United States. We are positioned for a rising market and think that the
best way is to invest in financials," said HSBC equity strategist Robert
Parkes.
With risk appetite dominating markets, safe-haven German Bunds fell
45 ticks.
Gold, also pressured by signs the U.S. Federal Reserve could start
winding down its support, extended its longest losing streak in four
years to hit a one-month low of $1,338.95 an ounce.
Investors have been dumping gold, which is down 20 percent so far this year, as stocks and the dollar continue to outperform.
If it closes in the red on Monday, it would match the metal's longest losing streak since March 2009.
Fed Watch
As Europe headed toward mid-morning, Brent crude dipped to $104.15 a barrel while copper had eased 0.7 percent to
$7,282.50 a tonne as the talk of the Fed tapering its bond purchases weighed on sentiment.
The Fed will break up this week's barrage of PMI data on Wednesday when it publishes the minutes of its recent meeting
and its chairman Ben Bernanke speaks in front of Congress.
Following the recent comments on its $85 billion a month bond-buying programme, investors - who have become used to
successive rounds of stimulus in recent years - will be watching closely to see if the phase is nearing an end.
The debate going on at the U.S. central bank is one of the key reasons for the dollar's recent strength.
Focus was back on the yen on Monday, however, after Japan's economy minister suggested over the weekend the
government might now be satisfied with its level after a recent slump.
"People say the excessively strong yen has corrected quite a bit. If the yen continues to weaken steadily from here, negative
effects on people's lives will emerge," Japanese Economics Minister Akira Amari told a Sunday talk show.
The yen was last trading off of Friday's 4-1/2 year low at 102.5 yen to the dollar, while the euro rose back towards $1.29
despite ongoing talk about further ECB rate cuts.
"All eyes should be on central banks when judging risk appetite and its impact on FX markets," Morgan Stanley's FX strategy
team wrote in a note.
"The U.S. economy has developed pockets of strength, leaving the market with the impression that the Fed might be the first
major central bank to pull liquidity away from markets."