Lowered expectations of US rate hike assisted stock markets around the world to move up on September 6. The highs subsequently dampened a little after investors surmised that a pact between Russia and Saudi Arabia was devoid of any commercial use. Oil went up a whopping five percent on the news that the two large producers have inked a deal for market stabilization. The gains unravelled when analysts found out that the agreement did not specify any immediate action.
Stock markets in the European Union were predictably choppy. It grazed eight month highs and then reversed when trading slowed down in absence of American markets. The markets were closed for public holiday. Alexander Novak, the Russian energy minister, and Khalid al-Falih, his counterpart in Saudi Arabia, spoke together of freezing the production of oil as one of preferred possibilities. The two met at China’s G20 summit. However, they said that this possibility is one of many in the future. It is to be said that despite the choppy financial weather, the European MSCI 46 country share index went for a 0.2 percent gain post an excellent day for the Asian markets.
Post payroll numbers, bonds came back to favour after bets were placed on a hike in the American rates in September. The emerging market stocks had an excellent day since July as it jumped 1.3 percent. According to Paul Fage, a strategist at TD Securities, analysts do not expect that the Federal Reserve will do any action until 2017 so that the ground could be laid for further gains. There were multiple factors in play other than the reaction of the Federal Reserve and swings in the oil prices. The Japanese Yen reversed its previous losing streak as investors were disappointed by Bank of Japan. The former has expected much clearer signals that the monetary policy of the country could be relaxed even more in September.
Haruhiko Kuroda, the Governor of the Bank of Japan, has already signalled that its hige stimulus program will continue to function. However, no indication exists that there could be an expansion in the near term. The governor has the trust of Shinzo Abe, the Prime Minister of Japan. The latter has said that he implicitly trusts the governor to take correct steps. There was a drop of 0.6 percent in the dollar to about 103.35 yen. The former gained about four percent compared to Japanese currency in recent days.