Dovish Fed boosts emerging assets, stocks at 20-month high

Asia markets down ahead of Fed but oil prices recover

Trading in stock markets is cautious and the dollar is slightly weaker as investors look ahead to an expected interest rate increase by the Federal Reserve. With the Fed policy meeting out of the way, investors are now focused on the G20 financial leaders in Baden Baden starting later on Friday.

The Dow Jones Industrial Average rose 96.65 points, or 0.46 percent, to 20,934.02, the S&P 500 gained 16.79 points, or 0.71 percent, to 2,382.24 and the Nasdaq Composite added 35.65 points, or 0.61 percent, to 5,892.47.

EUROPEAN OPTIMISM: Stock markets across the Atlantic rose, with the French CAC 40 up 0.6% and Germany's DAX up 0.5%. It had plunged 0.11 percentage points the prior day, after the Fed threw cold water on speculation that it may get more aggressive in raising rates.

Holdings of SPDR Gold Trust fell 0.28% to 837.06 tonnes on Thursday from 839.43 tonnes on Wednesday.

Across the Atlantic, European stocks rose on Thursday after far-right candidate Geert Wilders was defeated in a closely watched Dutch election, pouring cold water on fears that a populist wave was sweeping the continent.

The 10-year Treasury yield fell to 2.51 percent from 2.54 percent late Thursday.

Nevertheless, since the start of the year investors have traded French government debt at a heavier discount from ultrasafe German bonds, which means they are still distrustful of polls after last year's decision by Britain to leave the European Union and Donald Trump's victory in the USA, both of which came as a surprise.


SOME CENTRAL BANKS FOLLOW THE FED: China's central bank raised a short-term interest rate on lending to banks but left its benchmark rate unchanged after the USA increase.

EUR/USD slipped 0.29% to 1.0735, just off a five-week high of 1.0783 hit overnight.

Nirmal Bang Commodities in a research note said, "We expect prices to trade range bound for the day, by not far from over one-week highs hit the session before, remaining on course for their first weekly rise in three".

OTHERS STAND PAT: Japan's central bank left its benchmark lending rate unchanged and said it would work toward a 2% inflation rate target.

The S&P 500 was virtually flat at 2,382, as of 10 a.m. The precious metals had lost Rs 400 in the last two days.

Expectations for higher inflation across the globe, as many central banks, including the Federal Reserve and European Central Bank, begin to pull back the pace of implementing quantitative-easing measures, also have helped to keep gold above $1,200 an ounce, which is seen as a key support level. The euro rose to $1.0733 from $1.0713, and the British pound rose to $1.2352 from $1.2301.

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