World stocks rise on Fed easing bets

World stocks rose yesterday as investors bet on further asset buying by the US Federal Reserve and a continuation of global currency flows towards emerging markets.
By The Newsroom
Published 12th Oct 2010, 11:09 BST
Updated 12th Oct 2010, 11:09 BST

The dollar rebounded as profit-taking by dollar bears reversed the flow against the US currency, weakened amid rising expectations for Fed stimulus.

Finance policymakers meeting over the weekend in Washington produced no quick fix for global economic imbalances, providing no barriers to the cheap money trade of selling dollars to buy emerging market assets and commodities.

Hide Ad
Hide Ad

Reflecting this, MSCI's main emerging market stock index climbed more than half a per cent for a nearly 12 per cent year-to-date gain. JPMorgan's EMBI+ index showed investors snapping up emerging market government debt.

Both moves are continuations of massive flows into emerging markets in search of faster growth and higher yields than those available in developed economies.

EPFR Global said in its latest flow report at the end of last week that emerging market equity fund flows had hit a 33-month high and emerging bond funds had absorbed more than 629m in a week.

"It is increasingly being seen as the trade for all seasons," said David Shairp, global strategist at JPMorgan Asset Management.

Friday's US jobs data, which was worse than expected, raised expectations the Fed will buy more assets under its quantitative easing (QE) programme.

Related topics:Washington