Published: Wed, September 28, 2016
Economy | By Melissa Porter

Stocks gain moderately as oil, commodity prices rise

Stocks gain moderately as oil, commodity prices rise

This is the exact problem the US Dollar is facing today, even as December 2016 rate hike odds rise: the Fed is lowering is expectations for the US economy and thus, reducing the estimated glide path of interest rates.

World stock indexes jumped and the Nasdaq hit a record high on Thursday while bonds rallied, a day after the Federal Reserve signaled an increasingly cautious approach to future USA rate increases.

China's CSI 300 index .CSI300 climbed 0.9 percent, and the Shanghai Composite .SSEC moved up 0.7 percent. The sector component is made up largely of real estate investment trusts, which enjoy certain tax benefits by paying out much of their income as dividends.

The Federal Reserve kept its key interest rate unchanged Wednesday but signaled it is likely to raise it later this year.

Stock markets, despite some weakness on Friday, were also on course for their biggest weekly gain in two months after a week of central bank meetings that left investors still unconvinced of US policymakers' intent to put an end to an era of ultra-low interest rates. The central bank said risks to its economic outlook are "roughly balanced". Marathon Oil rose 14 cents, or 1 percent, to $14.80. It was the first time it has used that wording since late a year ago, when it most recently raised rates.

The decision caused bond prices to rise and the USA dollar to fall against other major currencies, which in turn help boost commodity prices since they are priced in dollars. Energy and materials companies had some of the biggest gains. USA benchmark crude was up $1.11 to $46.45 a barrel, while Brent crude, used to price Global oils, rose 85 cents to $47.68 a barrel. It also reduced its longer-run interest rate forecast to 2.9 percent from 3 percent.

Steel, airline, commercial real estate, and oil service stocks are also seeing considerable strength, moving higher along with most of the other major sectors.

BONDS AND CURRENCIES: U.S. government bond prices rose.

Freeport-McMoRan, the mining giant, jumped 44 cents, or 4.2 percent, to $10.98.

Among other precious metals, silver was 0.3 percent lower at $19.78, but was the biggest riser this week among the main precious metals, climbing 5.5 percent, the most since the week ending July 1. Murphy Oil rose $1.14, or 4.3 percent, to $27.55 and Transocean rose 51 cents, or 5.6 percent, to $9.65. The dollar edged up to 100.78 yen from 100.51 yen.

The euro EUR=EBS was little changed at $1.11895 (0.858189 pounds), after gaining 0.3 percent on Wednesday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.6 basis points at 1.622 percent. While the U.K.'s FTSE 100 Index has shot up by 1.4 percent, the German DAX Index and the French CAC 40 Index are soaring by 2.5 percent and 2.6 percent, respectively.

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