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Yellen drives global stock markets rally
Posted Date 2016/03/31 00:44

 Global stock markets powered higher on Wednesday after Federal Reserve boss Janet Yellen hinted that the US central bank would not lift interest rates any time soon.

 

Wall Street rallied overnight after Yellen offered a more dovish outlook than expected on monetary policy, in her first public remarks since the Fed's March meeting.

 

The news sent Hong Kong and Shanghai equities soaring on Wednesday, but Tokyo fell on the back of a stronger yen which hurts exporters.

 

The largely positive mood spilled over into Europe where major stock markets gained about 1.80 per cent in early afternoon deals.

 

Britain's FTSE 100 advanced 1.6 per cent and Germany's DAX climbed 1.8 per cent. France's CAC 40 gained 1.9 per cent. Asian stocks were mixed after the Asian Development Bank said economies in the region will grow at a slower pace in 2016 and 2017 because of reduced growth in China and a weak recovery in other major industrial economies. Tokyo's Nikkei 225 lost 1.3 per cent as the yen continued to strengthen. Hong Kong's Hang Seng index climbed 2.1 per cent. South Korea's Kospi rose 0.4 per cent.

 

"European equities are trading higher... on the back of a late rally in US stocks in the aftermath of a speech by US Fed chief Janet Yellen," said analyst Markus Huber at City of London Markets.

 

Yellen promised a cautious approach to future US interest rate hikes, saying the central bank has to pay heed to "broader concerns about global financial developments", including oil prices and the overall pace of growth.

 

A better-than-expected reading on US growth and other improved data recently had raised hopes that the global turmoil at the start of the year may have ended, and fuelled talk that the central bank might consider a further tightening of borrowing costs.

 

However, while Yellen pointed out that the world's top economy had "proven remarkably resilient" in the face of a global slowdown - particularly in China - and plunging oil prices, she took a dovish stance on monetary policy this year.

Meanwhile, the dollar headed for its worst month in 5 1/2 years a. The yen strengthened.

 

A gauge of the greenback approached the lowest since June after Yellen said the Fed will act "cautiously" as it looks to raise rates against the backdrop of a deteriorating global economy. The dollar has fallen against all of its 31 major peers in March with Russia's rouble and Brazil's real posting the biggest gains, helping emerging-market currencies to their best month in 18 years. 

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