Saturday, 22 March 2014 00:00
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REUTERS: World markets steadied on Friday after a volatile run driven by speculation over shifts in US monetary policy, with stocks up slightly, Bunds flat and the euro at a two-week low against the dollar.
But the US Federal Reserve’s plans look set to resume centre stage later in the day as a number of its officials give speeches.
A bounce in most leading Asian and US indices overnight helped the MSCI World Index trade up 0.1%.
That gain was matched in early deals by the euro zone’s blue chip Euro STOXX 50 index.
An escalation of US sanctions against Russia over the crisis in Crimea kept Europe’s investors cautious, though the index remained on course to snap a two-week losing streak and chalk up its best weekly performance of the year.
The lack of major violence in the region in recent days has helped a partial recovery in market sentiment, but the fresh US sanctions announced overnight and a weakening in the credit outlook for Russia from ratings agency Fitch kept traders wary about stocks with heavy sales there.
Russian stocks opened down 3%. “There hasn’t been any military escalation, so the impact of the crisis on the overall European market is very small now, but on a more granular view, it’s best to avoid all the stocks exposed to Russia, so it’s a market for stock-pickers,” a Paris-based trader said.
An important index options expiry on Friday was also helping support the market, given the heavy number of calls at the 3,100 point level, but traders said this could struggle to be maintained into next week.
Fed Chair Janet Yellen’s suggestion on Wednesday that the first US interest rate hike could come in the first half of 2015, earlier than many had expected, continued to support the dollar against the euro, yen and Swiss franc.
Two-year Treasury yields rose to their highest in six months.
Those moves suggest markets will also pay close attention to a quartet of Fed speakers later on Friday. St. Louis Fed President James Bullard, Dallas Fed President Richard Fisher, Minneapolis Fed President Narayana Kocherlakota and Fed Governor Jeremy Stein are all due to talk.
Against a basket of major currencies, the dollar was trading at 80.171, not far from a high of 80.354, a level not seen since late February.
The euro eased to $ 1.3777, having plumbed a two-week low of $ 1.3749. It was on track to post a 1.0% drop this week and record its first weekly fall since late January.
