Dollar Weakens, Gold Climbs to Record on Fed

Thursday, 28 Apr 2011 06:32 AM

 

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The Dollar Index fell to a three- year low and gold climbed to a record after the Federal Reserve renewed its pledge to keep U.S. interest rates near zero. Stocks rose worldwide for a third day on improved earnings.

The Dollar Index slid for an eighth day, the longest losing streak since March 2009, slipping 0.7 percent to 73.036 at 9:34 a.m. in London. The MSCI World Index rallied 0.8 percent to the highest since July 2008. The Stoxx Europe 600 Index gained 0.2 percent and Standard & Poor’s 500 Index futures increased 0.1 percent. Gold jumped to $1,534.05, copper rose 1.2 percent, and oil in New York reached the highest since September 2008.

U.S. economic growth may have slowed in the first quarter, underscoring Fed Chairman Ben S. Bernanke’s decision to keep rates low for an extended period, according to a Bloomberg survey. Royal Dutch Shell Plc, Europe’s biggest oil company, said profit rose 30 percent, and Deutsche Bank AG reported record earnings for its consumer-banking and asset-management units. Procter & Gamble Co. and Exxon Mobil Corp. are due to release results before the start of New York trading.

“The monetary policy stance of the Fed implies that low interest rates will continue to support the hunt for yield and spur risk appetite,” Tim Brunne, a credit strategist at UniCredit SpA in Munich, wrote in a note to investors.

Dollar, Yen

The dollar weakened 0.3 percent against the euro, falling for the eighth day and breaching $1.48 for the first time since December 2009. The pound rose above $1.67, also for the first time since the same month. The so-called Aussie climbed to $1.0947, the most since it was freely floated in 1983, on speculation the central bank will raise interest rates to contain inflation earlier than the Fed. New Zealand’s dollar depreciated against all 16 of its most-traded peers after the central bank kept its main rate at a record low and called the currency’s rise “unwelcome.”

Two stocks gained for every one that fell in the Stoxx Europe 600. Deutsche Bank, Germany’s biggest bank, surged 4.3 percent, the most in three months, and Shell advanced 0.5 percent to the highest level since the shares started trading in 2005. SAP AG, the largest maker of business-management software, slid 5.7 percent after reporting a smaller-than-expected increase in profit.

The MSCI Asia Pacific Index increased 1.3 percent to a two- month high as Japan’s Nikkei 225 Stock Average rallied 1.6 percent.

The gain in S&P 500 futures indicated the benchmark gauge for U.S. equities will extend the highest level since June 2008. Procter & Gamble, Exxon, Colgate-Palmolive Co. and Bristol-Myers Squibb Co. are among 59 companies in the index releasing earnings today.

Starbucks

Seventy-seven percent of companies in the S&P 500 that have reported results since April 11 have exceeded analysts’ per- share profit forecasts, according to data compiled by Bloomberg. Starbucks Corp., the world’s largest coffee-shop operator, fell 2.2 percent in German trading today as second-quarter profit matched analysts’ projections.

Russia’s Micex Index advanced 0.3 percent as OAO Gazprom rallied on earnings that beat analysts’ estimates. The ruble strengthened 0.8 percent against the dollar, matching gains in South Korea’s won and the South African rand. China’s Shanghai Composite Index fell for a fifth day, dropping 1.3 percent on speculation the government will increase interest rates as soon as next week to tame inflation.

Copper climbed for the first time this week to $9,428 a metric ton, and crude oil rose as much as 0.8 percent to $113.70 a barrel in New York. Corn gained 1 percent, the third advance this week, as rains may delay planting in the Midwest, the biggest U.S. growing region.

 


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