Dubai: Investors are not fretting about a rate hike for a change.
European stocks rose to hit its highest level in a month, joining its peers in Asia on confidence that the US economy is in a position to absorb any rise in borrowing costs. The US Dollar rose to its highest level in eight weeks.
US Federal Reserve Chair Janet Yellen on Friday that she believed growth and the strengthening of the labour market would continue, and in that case, “probably in the coming months such a move would be appropriate.”
“It is important for investors to accept that the Fed is not going to keep the rates low forever. The approach from the Fed is going to be gradual and this was reverberated by Yellen on Friday and the market participants have digested most of this news. The reaction which are citing in the market is the result of this,” Naeem Aslam, chief market analyst at Think Forex, told Gulf News.
The EURO STOXX 50 price was 0.28 per cent higher at 3,087.23, after hitting a high of 3,088.93. German DAX was 0.37 per cent higher at 10,324.17. CAC 40 index was 0.21 per cent higher at 4,524.02. Earlier in the day.
Japan’s Nikkei index rose more than 1 per cent as expectations rose that the government would delay a sales tax hike scheduled for April next year.
The Nikkei index closed 1.39 per cent higher to be at 17,068.02. However, trade was thinning out with public holidays in Britain and the United States on Monday.
The Dollar hit its highest level in two months. The Bloomberg Dollar Spot Index advanced less than 0.1 per cent, bringing its gain in May to 3.6 per cent.
“The US dollar is expected to remain well bid at current levels,” Vaqar Zuberi, Portfolio Manager & Senior Analyst within Mirabaud Asset Management’s Hedge Fund team.
Strong dollar weighed on oil prices. Brent crude fell 0.28 per cent to be at $49.76 per barrel, after hitting a high of $50.13.
Going ahead, traders would eye the US jobs data on Friday to gauge the strength of the US economy to withstand any hike in rates.
This week will also see the European Central Bank hold its policy meeting on Thursday after the publication of inflation and lending data earlier in the week. The ECB is expected to hold the rates and reaffirm its focus on implementing the stimulus package announced in March.
The dollar also weighed on oil prices. Brent crude fell 0.28 per cent to be at $49.76 per barrel, after hitting a high of $50.13.
