Morning Bell: Fed "Twists"
While Antonis Samaras of New Democracy in Greece has been officially installed, tensions are running high in the Eurozone as politicos call for further action in the form of bond purchases. German Chancellor Angela Merkel still refuses to help buy regional bonds in an effort to reign in yields. Comments from Fidelity show that investors are wary of further inaction from the Eurozone and expect further bailouts. Stocks closed mostly higher yesterday as the anticipation of further Fed stimulus propped up markets. The Italian MIB rose 2.13% while the Spanish IBEX climbed 1.53%. The Swedish OMX ticking higher 1.48%. EURUSD has fallen back below the 1.27 handle to 1.2670 while GBPUSD is down 0.25% to 1.5679.
Growth figures from New Zealand came in at double expectations with GDP growing at 1.10% versus 0.50% forecast. NZDUSD has rebounded since the announcement, rising to 0.7967. While Asian equity markets are mixed following the FOMC rate statement with the Nikkei edging 0.96% higher following a move to nominate 2 new members to the BoJ who judge looser monetary policy as the mechanism for growth. USDJPY is trading higher at 79.580. The Hang Seng and Australian ASX are both weaker, falling -0.75% and -0.68% respectively as China seeks to bolster foreign investment in capital markets and Australia reels from the dip in commodity prices.
The Federal Reserve moved to expand "Operation Twist" in a much anticipated move by markets even though the commentary noted a further decline in growth forecasts. The comments also highlighted the headwinds to the global economy stemming from Europe. Indices closed mixed as the Nasdaq rose marginally, gaining 0.02% while the S&P 500 declined -0.17% and the Dow Jones lost -0.10%. WTI crude oil fell to its lowest level in 8-months, ticking down -1.29% to $80.40/barrel. Soft commodities are generally weaker while precious metals fall as no further monetary stimulus has yet been announced. Gold is down -0.85% to $1602.10 while silver has plunged -1.85% to $27.865. Following the employment data, existing home sales will be announced later this afternoon.