Global stocks and the dollar edged higher today, boosted by a cautiously brighter outlook from the Fed and news that most US banks passed stress tests.
European stocks rose to near eight-month peaks, and the dollar notched the latest in a series of 11-month highs against the yen. The greenback also reached its strongest against the euro in a month, buoyed by speculation that the Fed could be inching away from adding more stimulus to the world's biggest economy.
Key US indices, however, opened only slightly higher after closing at multi-year highs in the previous session.
The US Federal Reserve yesterday described the country's output as "expanding moderately," compared to the "modest" growth description in its previous statement. Many analysts took the view that a further round of asset buying by the US central bank is now less likely.
Separately, the Fed also said yesterday that most of the largest US banks passed their annual stress test in a report that underscored the recovery of the financial sector but called out a few laggards, including Citigroup.
"The stress tests kind of marked the unofficial end of the 2008 financial crisis," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
"There is a lot of news in the market in the last couple of days of a global nature," he said, referring to the Greek debt crisis and the Fed's policy statement.
"Given the fact the market has rallied so far, you have investors coming in today and trying to consider what the next phase for the market will be," he added.
Hints of a brighter outlook crept across the Atlantic as a slight rise in euro zone industrial production data for January ended two consecutive monthly falls and pointed towards the region's eventual recovery.
The Dow Jones industrial average gained 15.44 points, or 0.12 per cent, to 13,193.12. The Standard & Poor's 500 Index dropped 0.14 points, or 0.01 per cent, to 1,395.81. The Nasdaq Composite Index gained 2.56 points, or 0.08 per cent, to 3,042.44.
The FTSEurofirst 300 pan-European index of top European shares was 0.73 per cent higher at 1,103.32 and hit its highest intraday level since July 26, while the MSCI world equity index rose 0.17 per cent.
The dollar rose 0.83 per cent to 83.56 yen. The euro weakened 0.24 per cent to $1.3050, its lowest since February 16th.
Reuters
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