World stocks, oil surge on central bank stimulus hopes


AFP

LONDON — World stock markets and oil prices rallied Friday, building on the previous day’s recovery that was triggered by the European Central Bank hinting at more eurozone stimulus. US Stocks Rise, Joining Global Rally

U.S. stocks opened higher Friday, rising with global stocks on speculation of further monetary stimulus in Japan and the eurozone. Half an hour into trade, the Dow Jones Industrial Average was up 241.82 points (1.52 percent). The broad-based S&P 500 rose 35.49 (1.90 percent), while the tech-rich Nasdaq Composite Index advanced 101.14 points (2.26 percent).

Equities and crude began rebounding Thursday after the ECB said there were “no limits” to the stimulus measures it might take to boost the eurozone economy. Sentiment was boosted further Friday by a report that said Japan’s central bank was considering similar moves. In midday trade, European stock markets were enjoying sizeable gains of more than 3.0 percent “No doubt this reversal in fortune for equities has been spurred on by the prospect of more ECB stimulus in March,” said Craig Erlam, senior market analyst at Oanda trading group. The week’s trading has seen volatile swings, with top European stock markets plunging by 3.5 percent Wednesday on fears over global economic weakness After a sell-off that has wiped several trillion in U.S. dollars off global markets so far this year, the prospect that two of the world’s biggest central banks were ready to finally step in gave investors something to cheer about. On Thursday, ECB boss Mario Draghi highlighted concerns about the impact of plunging equity and oil prices on already weak inflation and pledged the bank would reconsider its monetary policy at its March policy meeting. His comments lit a fire under European stocks and also supported a Wall Street rally on Thursday. On Friday, Japan’s respected Nikkei business daily reported that the central bank is weighing up its own plans to fend off the threat of deflation that has been exacerbated by the oil crisis.

The latest developments spread some much-needed confidence around trading floors after the worst-ever start to a year. Tokyo led the gains, surging 5.9 percent, the best one-day performance since early September, with a weaker yen helping exporters. Hong Kong ended 2.9 percent higher and Shanghai added 1.3 percent. Sydney added more than one percent and Seoul 2.1 percent, while there were also substantial gains in Taipei, Singapore and Manila.

Oil Soars Oil prices also extended gains to climb above US$30 a barrel, having soared more than 4 percent on Thursday on the back of Draghi’s comments and a report showing U.S. inventories rose less than expected last week. However, the two contracts remain around 12-year lows owing to a supply glut and weak demand.

Earlier this week, WTI fell below US$27 a barrel and Brent went under US$28. With oil prices rallying, energy companies saw their share prices rocket on Friday. In midday London deals, Royal Dutch Shell was up almost 6.0 percent and BP won 3.8 percent. The positivity also seeped into currency markets as investors shifted out of assets considered havens such as the yen. Russia’s battered ruble meanwhile bounced back after the jump in crude oil prices, recovering ground a day after it slumped to an all-time low against the U.S. dollar. The nation’s energy-reliant economy has been pushed into recession by tumbling oil prices and Western sanctions over Ukraine.

Key Figures around 1500 GMT

— London – FTSE 100: UP 2.19 percent. — Frankfurt – DAX 30: UP 2.41 percent. — Paris – CAC-40: UP 3.53 percent. — Tokyo – Nikkei 225: UP 5.9 percent at 16,958.53 (close)