Yellen's comments boost global equity markets

Thursday, November 14, 2013

Asian stocks advanced during overnight trading, reversing fortunes in Chinese markets and building on gains in Japanese markets as comments from Janet Yellen, nominee for Fed chair, hinted that monetary easing in the US would continue at its current pace. The Nikkei and TOPIX both rose for the third consecutive session, adding 2.12% and 1.19% respectively as better than expected Q3 GDP figures, coming in at 1.9% q/q, further bolstered market confidence. Chinese stocks managed to regain some of the previous sessions losses as the CSI 300 rallied 0.72% and the Shanghai Composite added 0.6% throughout the session.

US equity markets pushed to fresh record highs as investors interpreted Yellen’s comments as a continuation of stimulus. The S&P 500 gained 0.81% throughout the day, reaching a new record high of 1782 while the DJIA also managed to close at a record high, adding 0.45% and ending the day just above 15,821. Providing a testimony ahead of a hearing before the Senate Banking Committee today, Yellen stated that the economy and labor market were performing “far short of their potential”, signalling to market participants that stimulus measures would not be abruptly cut.

Three month LME copper prices fell sharply yesterday, dropping 1.66% ahead of Yellen’s statement as uncertainty surrounding the taper weighed heavily on risk assets. Copper prices suffered their largest one day decline in three weeks as the red metal struggled to hold on to intermediate support levels towards $7120/tonne provided by the 100 day MA, extending declines for a third straight session as the outcome of China’s third plenum meeting left market participants dissatisfied. The move tracked a retreat in Chinese stocks earlier in the week, particularly industrial groups as investors moved out of risk assets ahead of the Senate Banking Committee meeting later today.

European markets opened on a strong footing this morning, carrying over the positive sentiment from both the US and Asian sessions. London’s blue chip index opened 0.9% higher on the renewed optimism with retailers and industrials leading the rise, as investors anticipate strong retail sales. Both the DAX and CAC opened significantly higher, snapping a two day losing streak as Q3 GDP figures came in largely as expected.

 

SPX closes at record high as VIX pushes lower

 SPX Index SP 500 Index SPVIX 2013 11 14 09 18 03

 

3-month copper breaches support offered by the 100 day MA ahead of Yellen testimony

 LMCADS03 Comdty LME COPPER 3 2013 11 14 08 48 02

 

Events for today: Thursday, 14 November 2013

0700

DE

Q3

GDP

0930

UK

Oct

Retail Sales

1000

EZ

Q3

GDP

1330

US

Q3

NF Prod. & Labour Costs

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

View Economic Market Calendar 

More from: Kash Kamal