Stockmarket Respect: Can You All Rise?

World stocks rose yesterday (12 January)hitting 15-month highs on stronger-than-expected Chinese trade data, reviving bets on global economic recovery, while the US dollar fell broadly as risk appetite increased.

US stocks zig-zagged as investors took a breather after a week of gains that pushed the S&P 500 to close at fresh 15-month highs, while nervous investors braced for the start of the quarterly earnings reporting season.

The US dollar fell following Friday’s weak US jobs data and comments from a Federal Reserve official that interest rates in the United States are likely to stay low for quite some time.

Global equities measured by the MSCI All-Country World rose 0.72 per cent after rising to the highest since late September of 2008. Emerging stocks hit 17-month highs rising 1.09 per cent, following a 74 per cent rally last year.

“We have got a lot of data coming out over the next few weeks and the fourth-quarter earnings season in the United States is about to start, so there is every reason for investors to stay on the sidelines.” said Jim Wood Smith, head of research at Williams de Broe in London.

Growth in China’s exports and imports last month pushed commodities higher with gold rising 1.4 per cent to a 5-week high, copper jumping 1.5 per cent and aluminium advancing 2.45 per cent.

Exports rose 17.7 per cent from a year earlier, dwarfing the 4.0 per cent rise forecast by economists and breaking a 13-month streak of year-on-year declines. Imports surged 55.9 per cent, much more than the 31.0 per cent increase markets had expected.

Crude oil prices slipped to US$82.22 a barrel on forecasts for warmer US weather ahead from last few weeks’ freeze, after an earlier high near US$84 (RM280) a barrel.

DOLLAR & BONDS

A surge in Chinese exports increased optimism the global economy is recovering and boosted risk appetite, pushing investors to drop safe-haven dollars.

The dollar fell 0.61 per cent at 77.001. The euro rose 0.44 per cent at US$1.4519 having hit its highest level in more than three weeks at US$1.4557. Against the Japanese yen, the dollar fell 0.57 per cent at 92.08 from a previous session close of 92.610.

The US currency also continued to be pressured after data on Friday showed US employers cut 85,000 jobs last month, disappointing many in the market who had expected the US economy to stop losing jobs.

“The combination of the weak jobs report last week and the realization that the Fed is going to keep rates low for a long time has put a stop to the recent dollar rally,” said Vassili Serebriakov, a currency strategist, at Wells Fargo Bank.

Meanwhile, US Treasuries traded mostly higher, as investors nibbled at low-risk assets due to weaker stock prices and solid demand at a US$10 billion auction of government inflation-protected bonds.

Benchmark 10-year Treasuries were up 2/32 for a yield of 3.83 per cent, down 1 basis point from late Thursday.

The pan-European FTSEurofirst index of top shares closed down 0.1 per cent at 1,063.82 points, after touching a new 15-month high of 1,074.50.