04 February 2022
World Markets at a glance for Currency, Equity, Commodity, Bonds, Crypto Currency, Financial News & Major Economic Events.
- Euro rises to three-week high vs dollar after ECB’s Lagarde turns hawkish
- ECB opens door to 2022 rate hike in policy turnaround
- Exit from central bank stimulus gathers pace as BoE hikes again
- Hong Kong’s Hang Seng index soars more than 2% in mixed Asia-Pacific trading day
- U.S. oil busts through $90/bbl for first time since 2014
The euro surged to a three-week high against the U.S. dollar on Thursday after comments from European Central Bank President Christine Lagarde fuelled expectations of faster policy tightening, as she focused on the prospect of euro zone inflation overshooting.
The single European currency rose as high as $1.1452 , the highest since Jan. 14, and was last up 1.2% at $1.1441. The euro was on track for its largest daily percentage gain since early December 2020.
Sterling climbed to a two-year peak versus the euro after the Bank of England raised interest rates to 0.5% on Thursday, with nearly half of its policymakers pushing for a bigger increase to contain surging inflation
The dollar index, with the euro as the largest component, dropped 0.7% to 95.311 , on course for its biggest daily loss since May 2021.
European Interest Rate
The European Central Bank finally acknowledged mounting inflation risks and even opened the door a crack to an interest rate increase this year, marking a remarkable policy turnaround for one of the world’s most dovish central banks.
While Lagarde said the ECB would not rush into any move, she declined to repeat her previous guidance that an interest rate increase this year was “very unlikely”.
Sources close to the discussion said that a sizable minority of policymakers had pushed for the bank to take action on Thursday, possibly by announcing a faster reduction of bond purchases, before agreeing to hold off until March.
UK Interest Rate
Major central banks are clearly moving into inflation-fighting mode, with the Bank of England on Thursday hiking interest rates for the second time in as many months.
The BoE raised rates to 0.5% on Thursday and nearly half of its policymakers wanted a bigger increase to contain rampant price pressures, as the British central bank warned inflation will soon top 7%.
The move follows a rate hike in December, marking the first back-to-back increases in the Bank Rate since 2004 and reflecting urgency among policymakers to show they are on top of a growing cost-of-living crisis.
Shares in Asia-Pacific were mixed in Friday trade, following heavy losses overnight on Wall Street that saw the tech-heavy Nasdaq Composite plunging nearly 4%.
Hong Kong’s Hang Seng index led gains among the region’s major markets, rising 2.22% in morning trade. South Korea’s Kospi jumped 0.75%. Elsewhere, the Nikkei 225 in Japan sat below the flatline while the Topix index dipped 0.12%. The S&P/ASX 200 in Australia declined 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.64% higher.
The major averages fell overnight stateside, with the tech-heavy Nasdaq Composite plummeting 3.74% to 13,878.82 — its worst day since September 2020.The S&P 500 also saw significant losses, declining 2.44% to 4,477.44 while the Dow Jones Industrial Average slipped 518.17 points, or 1.45%, to 35,111.16.
Oil prices surged in late-day trading Thursday, sending the U.S. crude benchmark through $90 a barrel for the first time since 2014 due to ongoing supply worries and as frigid weather cascades across the United States.
Global benchmark Brent crude settled at $91.11 a barrel, up $1.64, or 1.8%, while West Texas Intermediate crude soared $2.01, or 2.3%, higher to end at $90.27 a barrel, the first time the U.S. benchmark has closed above the $90-level since Oct.6, 2014.
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