As the US Federal Reserve meets, investor speculation that the central bank will announce more stimulus for the US economy has driven markets broadly higher as risk appetite increased and the US dollar weakened. There also appears to be progress at the G-20 summit as world leaders work towards a coordinated response to the European debt crisis and Greece's creditors look set to modify bailout terms to ease the pressure on the nation following the weekend elections. The Federal Reserve is due to release its statement on interest rates and the economy tomorrow at 12.30pm Washington time and a lack of action from the Fed will almost certainly see markets correct significantly to the downside with market expectations of new stimulus particularly high. The Dollar index lost 0.7% overnight and the EUR opens the morning at 1.2680.
Investors were also buoyed by the results from the latest Spanish bond auction where the nation exceeded its target of raising EUR 3 billion. The auction result saw Spanish bond yields fall and the premium between Spanish bonds and the German benchmark narrow by 23 basis points to 551 points. 10 year Italian bond yields fell almost 20 points to 5.92%. Meanwhile in Greece, it appears that a renegotiation of targets for Greece may be forthcoming as the new government, which is still yet to be formed, is expected to request modifications to the rescue programs. Representatives of the EU, the IMF and the ECB are expected to travel to Athens once the new government is formed to evaluate the requested modifications. The Australian dollar has powered ahead to trade above 1.0200 overnight.
Greece, it appears that a renegotia Global stock markets rose for the fourth consecutive day on speculation that further easing from the US Federal Reserve is imminent. The S&P 500 rose 0.98% to close at 1,358 with commodity, financial and energy shares leading the gains. Microsoft rose more than 3% after the launch of its new Surface tablet computer. After having plunged 10% between April and June of this year, the index has gained 6% in June as investors bet on stimulus from the world's central banks. Earlier in Europe, most bourses gained more than 1.75% as fears surrounding Greece and Spain eased. Greece's ASE index gained over 3% and continues to rebound from a 22 year low reached on June 5.
Commodity prices have surged with the CRB index rising more than 1% to 277.21. WTI has risen more than 1% to $84.10 as the so called P5+1 Group resumes negotiations in Moscow with Iran over its nuclear programme. Precious metals have eased even as stimulus expectations mount with gold losing 0.4% to $1,621 and silver falling 1% to $28.40. Soft commodity prices skyrocketed overnight with multipercentage rises across the board. Copper gained 1%.
