Nov 10, 2014 8:29 AM
Global stocks solid as ruble surges on float news
The Associated Press
LONDON (AP) Stock markets around the world started the new week positively Monday while the dollar continued to drift lower following slightly disappointing U.S. jobs data. Russia's financial markets were in focus after the country's central bank scrapped its daily controls on the value of the ruble, allowing the battered currency to float freely in financial markets earlier than planned.
KEEPING SCORE: Amid a dearth of economic news in Europe, investors appear to have retained their recent bullish mindset. Britain's FTSE 100 as up 0.5 percent at 6,599 while Germany's DAX rose 0.3 percent to 9,315. The CAC-40 in France was 0.2 percent higher at 4,200. Wall Street was poised for modest gains at the open, with both Dow futures and the broader S&P 500 futures up 0.2 percent.
RUBLE FLOATS: The main development in Europe was the news that Russia's central bank has decided to allow the ruble to trade freely. Originally, the move had been planned for next year. The currency has come under sustained pressure in the face of Western sanctions over Ukraine and plummeting oil prices. The ruble has lost nearly half its value against the dollar this year. The move appears to have eased the pressure on the ruble, which strengthened sharply on the news, trading up 3.6 percent at around 45 rubles a dollar in midday trading. It also appears to have been greeted positively in stock markets the benchmark RTS index was trading 3.8 percent higher.
BUYING CHINA: China and Hong Kong led gains in Asia following the approval of a cross-border trading link that will give foreigners greater access to Chinese shares. That potentially could draw in more buyers and boost shares which have languished since hitting a peak in 2006. Authorized investors in both cities will be allowed to buy and sell up to 23.5 billion yuan ($3.8 billion) of stocks in certain companies each day through the link. Mainland Chinese investors will get up to 10.5 billion yuan of that daily limit, while investors in Hong Kong get the rest. The link is expected to go live on Nov. 17.
ANALYST TAKE: Stan Shamu, market strategist at IG in Melbourne, Australia, said the link "has prompted financial brokerage-related stocks higher, as investors feel optimistic about the prospect of global investors accessing Chinese stocks from Hong Kong."
CHINA'S TRADE: China's trade growth decelerated in October, though the 11.6 percent rise in exports from a year earlier was still relatively robust. China's consumer inflation rate was steady in October, government data showed Monday, amid signs of cooling economic growth. But the consumer price index rose 1.6 percent in October from a year earlier, the same increase as in September, reinforcing worries that a deeper slowdown is looming after growth slowed to 7.3 percent in the third quarter.
ASIA'S DAY: Hong Kong's Hang Seng gained 0.8 percent to 23,744.70 and China's Shanghai Composite surged 2.3 percent to 2,473.67. South Korea's Kospi climbed 1 percent to 1,958.23. Japan's Nikkei 225 closed 0.6 percent lower at 16,780.53 after the yen unwound some of its recent weakness against the dollar.
ENERGY: Oil prices continued to bounce back after hitting multi-year lows last week. The Benchmark U.S. crude rate was up 99 cents at $79.64 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price oil in international markets, gained $1.32 to $84.71.
CURRENCIES: The dollar drifted lower in the wake of last Friday's slightly weaker than anticipated U.S. jobs data for October. It was down 0.3 percent at 114.22 yen while the euro rose 0.3 percent to $1.2487.
THE QUOTE: "I believe the dollar's weakness will be temporary, especially against currencies where the central banks are still in easing mode, especially the euro and the yen," said Fawad Razaqzada, an analyst at Forex.com.