Sanguine comments at Senate hearing improve sentiment

Friday, November 15, 2013

US equity markets extended gains and reached record highs as comments from Janet Yellen hinted at a continuation of stimulus. Both the S&P 500 and DJIA pushed towards record levels as the indices gained 0.48% and 0.35% respectively after her testimony before the Senate Banking Committee. The S&P 500 has rallied 28% since the start of the year while the DJIA has gained 23% year-to-date as loose monetary policy supports risk assets higher. However, Moody’s cut the credit ratings of Morgan Stanley, Goldman Sachs and JPMorgan Chase by one notch each to Baa1, Baa2 and A3 respectively, highlighting the fragile economic climate and decreased likelihood of further government bailouts if the institutions get into further difficulties.

Asian stocks rallied higher during overnight trading, carrying over the positive sentiment from the US session. Japanese equities led the upward surge with the Nikkei adding 1.95% to cap the week with four straight sessions of gains and posting the highest levels since May. The TOPIX index advanced 1.68%, reaching its highest level in six months as investors reacted positively to Yellen’s dovish stance on the economy, stating that QE had made a “meaningful contribution to economic growth”. 

The Federal Reserve may consider limits on bank ownership and trading of physical commodities out of concern that an event such as an oil spill could undermine financial stability, according to Bloomberg. Janet Yellen, at the Senate Banking Committee yesterday, stated that the Fed were “involved in a very comprehensive review” of bank’s commodities activity and could impose higher capital and regulatory standards.

Investors will continue to digest Yellen’s comments, which suggest that stimulus measures will continue until the economy shows further signs of improvement. The comments, seen as bullish for risk assets, could see equity markets push higher during today’s trading session as investors switch focus towards the Empire manufacturing index and industrial production data in the US.

US equity markets rallied with both the DJIA and S&P 500 pushing to record highs

DJI Index Dow Jones Industrial 2013 11 15 10 39 29

SPX Index SP 500 Index Daily 2013 11 15 10 39 02

Meanwhile, gold prices struggle to find a floor, breaching $1300 in a downtrend

XAU Curncy Gold Spot Oz 2013 11 15 10 40 43


Events for today: Thursday, 15 November 2013

1330

US

Oct

NY Fed Manufacturing

1415

US

Sep

Industrial Production

1500

US

Aug

Business Inventories

OE: 

Nov  FTSE 100 & Equity (LIFFE) 

LT

Dec  Brent Crude (ICE)

Dec  Sugar (LIFFE)

OE: 

Dec  Sugar (NYBOT)

View Economic Market Calendar

Topics: DJI, Nikkei, SP 500, US Fed
More from: Kash Kamal