BANGKOK – Hopes that the U.S. Federal Reserve will maintain its stimulus program helped boost stock markets Monday.
A disappointing U.S. jobs report on Friday sparked worries about the health of the world’s biggest economy but also led to expectations that the Fed will continue to support growth via its $85 billion a month of bond purchases.
The Fed has already stated its intention to eventually reduce the purchases of Treasurys and mortgage bonds. The Fed has been pumping money into the U.S. economy for over four years in an effort to keep interest rates down and help boost the economy. The program has been a boon to stocks, where investors have fled in search of higher returns.
Britain’s FTSE 100 rose 0.3 per cent to 6,669.18 and Germany’s DAX added 0.3 to 8,429.28. France’s CAC-40 advanced 0.4 per cent to 4,060.10. Ahead of the start of trading on Wall Street, Dow Jones industrial futures were slightly higher at 15,595. S&P 500 futures were nearly unchanged at 1,704.40.
Asian stocks were mixed. Japan’s Nikkei 225 index fell 1.4 per cent to close at 14,258.04 as the dollar hovered below 100 yen. A stronger yen makes Japanese products more expensive overseas and can hurt companies whose survival hinges on exports.
Australia’s S&P/ASX 200 fell 0.1 per cent to 5,111.30 as traders waited for the Reserve Bank of Australia’s monthly interest rate decision on Tuesday and the release of employment figures for July on Thursday. South Korea’s Kospi fell 0.4 per cent to 1,916.22.
Hong Kong’s Hang Seng advanced 0.1 per cent to 22,222.01. Benchmarks in mainland China, Taiwan and New Zealand rose. Singapore and the Philippines fell.
On Friday, the U.S. government said 162,000 jobs were added in July, about 20,000 less than expected, while gains for the previous two months were revised down. While the U.S. jobs report wasn’t encouraging, it did make it more likely that the Fed would take its time cutting back on its stimulus program, analysts said.
The dollar fell against most currencies, a sign that some investors are betting the Fed may keep its monetary stimulus program at the current level for a little longer than expected. The stimulus lowers market interest rates, reducing the appeal of some dollar-denominated investments, such as Treasurys. That in turn weakens appetite for the dollar.
Benchmark crude for September delivery was up 1 cent to $106.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 95 cents to close at $106.94 per barrel on the Nymex on Friday.
In currencies, the euro rose to $1.3290 from $1.3274 late Friday. The dollar fell to 98.35 yen from 98.90 yen.