Stocks gain as volatility over Fed tapering eases
Rally sparked as investors decide scaling back of US bond-buying programme probably won't lead to higher rates in the short term
World shares ended a volatile week on a positive note yesterday and the US dollar reached a four-month high against the yen as worry dissipated about an end to the United States Federal Reserve's stimulus programme.
Volatility has eased as investors realise that scaling back the Fed's bond-buying programme, which will probably begin in the first quarter of next year, does not necessarily mean interest rates will rise soon afterwards.
We might see it slow waiting for the US employment report
"I think people have got the message," said Laurent Fransolet, the head of European fixed-income strategy at Barclays. "Everyone is starting to differentiate between tapering and tightening."
Solid US data has eased concern that weaker growth in China and the euro zone may set back the fragile global economic recovery. The data helped to bolster the optimistic tone, especially on world equity markets.
The mounting investor confidence over the outlook had lifted the MSCI's global benchmark for shares by 0.2 per cent yesterday although it was barely changed over the week.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent after shedding 1.4 per cent on Thursday. Japan's Nikkei, getting an extra boost from the weaker yen, added 0.1 per cent to edge close to its highest level of the year.
On Wall Street, the Dow Jones Industrial Average remained firm after crossing 16,000 for the first time ever. Japan's Nikkei index rose to near its highs for the year. The advance picked up across the rest of Asia, except for China.