Two thirds of the Bank of England’s MPC still oppose moves to normalise interest rates, despite rising price pressures. The Bank expects inflation in the coming months to be more than 5%, and exceed its February predictions, its minutes revealed yesterday. However, voting at the Bank’s April meeting showed no change from the previous two months, and analysts see little prospect of the MPC changing its dovish approach in the near term.
A REPORT from the Federal Housing Finance Agency is forecast to show US house prices fell for a fourth month, underscoring prospects that the Federal Reserve will maintain monetary stimulus even as central banks in Europe and Asia raise interest rates. Economists surveyed by Bloomberg News expect today’s report to say that home prices in the US fell to 0.3% in February.
SPAIN saw yields rise at its latest bond auction yesterday, raising fears that Eurozone debt contagion could spread to a country widely considered too big to bail out. Madrid sold 3.37bn of ten and 13-year dated bonds, but ithad to pay 31 basis points more for the cash than at it last equivalent sale in March.
Greek two-year benchmark bonds also reached a record yield of 21.1% yesterday, as it is rumoured that European officials might try to use the Easter break to organise a restructuring of Greece’s finances, despite EU claims that any default would have to be unilateral.
THE KNOCK to US confidence from this week’s Standard and Poor’s negative outlook seems to be forgotten already on Wall Street, as the Dow Jones surged to close at its highest level since June 2008. The Nasdaq index, meanwhile, had its biggest one-day jump in six months boosted by strong technology firm results.
EQUITIES are extending the biggest global rally of the year, lifting the MSCI Asia Pacific Index to a seven-week high, after Apple said second-quarter profit almost doubled. OCI jumped to a record after South Korea’s biggest polysilicon maker said profit surged, while Chinese banks rallied after Citigroup forecast higher earnings.
EUROPEAN shares are set to rise for the third straight session on Thursday, mirroring hefty gains on Wall Street, on growing optimism for corporate earnings and encouraging signs of an improving economy.
THE DOLLAR traded at $1.4572 per euro from $1.4523 in New York yesterday. It earlier reached $1.4582, the weakest since December 2009. It also dropped to 82.22 yen from 82.56 yen. The Dollar Index, which tracks the currency against those of six major trading partners, sank 0.4% to the lowest level since August 2008.
OIL, which has risen by 22% in New York this year, rose for a third day as signs of an improving US economy increased speculation that demand will increase. Futures for June delivery climbed as much as 0.9% overnight, extending yesterday’s 2.9% gain.
GLOBAL inflation fears and economic uncertainty has pushed gold to over $1,500 an ounce for the first time in history. Gold for immediate-delivery climbed as much 0.4% to a record $1,508.28 an ounce overnight. Cash silver advanced 1.1% to $45.7413 an ounce and is set for a seventh day of gains. Palladium increased by 1%.