Central bank promises raise sentiment (ISFM) (17-03-2010)

Investors were happy to hear that the world’s two largest economies were in no hurry to raise borrowing costs, and went on a buying spree that pushed major indices higher throughout the globe. That, together with easing concerns for now about the Greek debt crisis sent a ripple of hope.

The rebound in Asia, after the policy announcement by the Bank of Japan, stocks rose more than two percent, and although they later corrected, they were still over one percent higher at the end of the session. The Bank of Japan took a leaf out of the Fed’s book and promised to expand easy credit to keep the country's recovery on track and fight deflation, and announced it is keeping its interest rate at a super low 0.1 percent.

Concern about Greece fiscal woes also eased somewhat, after the news that the Standard & Poor's credit ratings agency cautiously backed the Greek government's attempts to get a grip on its borrowing by taking the country off so-called credit watch, which means that for now, the agency is not thinking about downgrading the country's BBB+ credit rating, giving much needed relief to the Greek government.

As a result, the euro kept its recent high spot steadying at $1.3766, after having reached a near six-week high of $1.3817. The British pound was the big gainer Wednesday, rising 0.8 percent to $1.5363 in the wake of the Fed's statement and figures showing a surprise fall in unemployment.

As for oil prices, the gain is due to both speculation that OPEC will keep production unchanged and that demand is seeing some improvement.

Back on the other side of the Atlantic, stock index futures were holding on to gains after data showed producer prices fell more than expected in February as energy costs tumbled.

Source: ISFM