Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


While you were sleeping: Yellen lifts equities

While you were sleeping: Yellen lifts equities

Feb 12 (BusinessDesk) – Stocks on both sides of the Atlantic gained as Janet Yellen, the US Federal Reserve’s new chairman, signalled continuity in the central bank’s policy and optimism about the US economic outlook.

“Let me emphasise that I expect a great deal of continuity in the FOMC's approach to monetary policy,” Yellen said in the Fed’s semi-annual testimony to the House Financial Services Committee.

The Fed announced a US$10 billion reduction in its monthly bond-buying program in December, followed by another US$10 billion cut after its next meeting, in January, downgrading the purchases to US$65 billion a month amid signs of improvement in the US labour market.

Policy makers are expected to continue reducing the program at a similar pace.

While the latest non-farm payrolls data for December and January were short of the mark, Yellen expressed optimism about the outlook.

“My colleagues on the FOMC and I anticipate that economic activity and employment will expand at a moderate pace this year and next, the unemployment rate will continue to decline toward its longer-run sustainable level, and inflation will move back toward 2 percent over coming years,” Yellen said. “The recovery in the labour market is far from complete.”

US policy makers have been “watching closely the recent volatility in global financial markets,” Yellen said. “Our sense is that at this stage these developments do not pose a substantial risk to the US economic outlook.”

Yellen will deliver the same testimony to the Senate Banking Committee on Thursday.

In afternoon trading in New York, the Dow Jones Industrial Average climbed 1.02 percent, the Standard & Poor’s 500 Index gained 0.88 percent, while the Nasdaq Composite Index advanced 0.75 percent.

Gains in shares of Boeing, last up 1.9 percent, and those of Chevron, last 1.7 percent stronger, propelled the rise in the Dow.

"It's very obvious she is working from the same playbook as Bernanke," Tom Porcelli, chief US economist at RBC Capital Markets in New York, told Reuters. "The Fed will continue to cut its bond purchases by US$10 billion at each policy meeting the rest of the year."

US Treasuries fell, pushing yields on 10-year bonds 6 basis points higher to 2.72 percent. The greenback also weakened.

“We know Yellen is more on the dovish side, so she wants more information that the labour market is improving, which is reflected in the more cautious side of the statement,” Charles St-Arnaud, a foreign-exchange strategist in New York at Nomura Holdings, told Bloomberg News. “Even though she’s made it clear that the Fed won’t slow the pace of tapering, there’s still stimulus in the pipeline, which weighs on the [US] dollar.”

In Europe, the Stoxx 600 Index ended the day 1.3 percent higher than the previous close. France’s CAC 40 increased 1.1 percent, the UK’s FTSE 100 gained 1.2 percent, while Germany’s DAX jumped 2 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news