Rise in global stocks and dollar as payrolls lead to risky trades

Stock markets went up on August 8 and the US dollar increased its gains as the appetite for risk was revived after robust figures in the American job market. There were renewed expectations of quicker growth of the United States. To prove it, there was a rise of 0.4 percent in MSCI All-Country World Index. A rise was also seen in STOXX 600 index, the pan-European stock market. Both of them rose as part of a wide equity rally on the basis of payrolls data announced on Friday. The SX7P Europe banks also continued their gains from previous lows. 

There was also a rise in the US dollar compared to a basket of six key currencies. The euro zone bond .DXY yields climbed as the American number pushed a sell off in the fixed income markets. According to Yukio Ishiziki of Daiwa Securities, steadily strengthening signals from the American economy were the reason that drove investors to quit safe haven assets like the JPY yen. He further added that markets were kept on the risk-mode due to payrolls data. This makes it harder to buy the yen  at present.

With stocks coming back in fashion, gold prices took a hit, touching one-week lows. According to Andreas Clenow of the Zurich headquartered ACIES Asset Management, many now prefer the American equity markets as their choice investment destinations. He said that the American markets look good and continue making record highs in United States. Clenow, however, pointed out that the stock markets in Europe now look increasingly sluggish. The .MSCIEF or MSCI Emerging Market Index had advanced by one point. There was also an uptick in the oil prices. This was the result of renewed discusions among a few OPEC state to control the output. However, this proposal was quickly nixed by Russia, a non-OPEC oil producer. 

Similar to its US counterparts, stocks and currencies in the emerging markets achieved their highest close in the space of a year. This comes after the prospects for the central bank stimulus along with better than anticipated jobs report in the United States which fueled a rising demand for the higher yielding assets. Assets in Turkey gained in value after there was a delay by Moody’s Investor Service in downgrading the country’s sovereign. There was also an advance in Thai currency and stocks post Thai voters approving a military backed constitution.


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