Business Essentials for Professionals


While Forex Gets Hit by Singapore Sting, Global Shares Reach 4 Month High

While Forex Gets Hit by Singapore Sting, Global Shares Reach 4 Month High
As markets took a positive view ahead of top policymaker and oil producer meetings, world stocks rose to their highest level in more than four months on Thursday and the dollar had a third day of gains.
While Europe was watching a meeting of the Bank of England as sterling continued to suffer worries over June's vote on EU membership, Singapore set the tone for the IMF's spring meeting as its normally conservative central bank unexpectedly eased policy.
As Russia hinted that there might only be a loose agreement on output levels at a exporter meeting in Doha at the weekend and OPEC warned of slowing demand, oil prices fell again.
Having just chalked up its biggest one-day gain in over a month the dollar, which most commodities are priced in, flexed its muscles again.
The dollar gained 0.1 percent on the yen to 109.42 yen , well away from Monday's 17-month trough of 107.63 yen and it was valued at $1.1246 per euro , way above a six-month low of $1.1465 touched on Tuesday.
"The dollar has been doing well over recent days particularly against Asian currencies today after the MAS (Singapore central bank) eased policy. We have the IMF meetings coming and we also have the Doha meeting which actually for the markets could be more important considering how bulled up the oil market has been recently," said Societe Generale FX strategist Alvin Tan.
As traders cashed in after a 2.6 percent jump on Wednesday and as miners .SXPP fell on lower oil prices, European shares  had a subdued first couple of hours.
MSCI's 46-country All World stocks index was up a fifth straight day to its highest since mid-December driven by big gains in Asia overnight. Asian shares have surged 5 percent since Friday.
After data previously showed economic growth stalled in the first quarter the central bank of Singapore set the rate of appreciation of the Singapore dollar policy band at zero that provided the main action.
A downdraft in other Asian currencies was triggered and the biggest drop for the Singapore dollar in eight months was sparked by this action. The Korean won  fell just as much as the SGD as it sank 1 percent against the greenback.
"It's very interesting, and eye-catching, that the MAS has gone back to post-global financial crisis settings, and sends a strong message about the weak external environment. As one of the world's most trade-sensitive economies, Singapore's concern over a 'less favourable external environment' should be noted by the likes" of South Korea, Australia and New Zealand," said Sean Callow, senior currency strategist at Westpac in Sydney.
Singapore's policy decision is yet another reminder of the headwinds facing the global economy notwithstanding the optimistic trade data out of China on Wednesday.
Citing a bunch of factors including chronic weakness in advanced economies, the IMF cut its global growth forecast for the fourth time in the past year earlier this week.
With an index of high yield debt settling at its highest levels since early December, there was robust appetite for risk.
With the yield on the 30-year Japanese government bond briefly falling a record low of 0.385 percent, yields swung lower in the government bond markets. U.S. debt followed with yields on ten-year notes slipping to 1.75 percent.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc