LONDON: World stock markets mostly rose on Monday (Mar 13) as investors priced in the near-certainty of a US rate rise this week following a forecast-busting US jobs report.
|Logo of London Stock Exchange. (AFP/LEON NEAL) |
But enthusiasm was muted by uncertainty surrounding a Dutch election this week and the shape of Britain's exit from the EU.
The pound advanced amid speculation that Britain could trigger as soon as Tuesday the formal process for exiting the European Union.
"The anticipation of a busy week ahead including the possible triggering of Article 50, a potential populist revolt in the Dutch national election and a likely US interest rate hike meant there was a slow burn in markets," said Jasper Lawler, Senior Market Analyst at London Capital Group.
Sterling held onto its gains despite the announcement by Scotland's nationalist government of plans for another independence vote.
In the United States, Friday's employment report reinforced a long-running belief the world's top economy was on a strong growth track and focus is now on the conclusion of the central bank's policy meeting on Wednesday.
In a busy week for global monetary policy, the Japanese and British central banks also meet this week.
JUST DAYS AWAY
"Another rate hike could be just days away, indeed, given the way the Fed's policymakers have been talking, it is practically a certainty at this point," said Chris Beauchamp, chief market analyst at IG trading group.
The dollar wobbled on Monday as some traders took out their profits before the Fed meeting.
"Markets are already fully priced for a Fed rate hike on Wednesday," said Janu Chan, a senior economist at St George Bank in Sydney.
Most stock markets in Asia started the week on a high - tracking all three main Wall Street indices - after the Labor Department said the US economy created 235,000 new jobs in February, much more than estimated.
Wall Street was a touch easier, having opened unchanged. "US stocks are hovering around the flatline in early action ... amid heightened Fed rate hike expectations for Wednesday and ramped up political uncertainty in Europe," said analysts at US brokerage Charles Schwab.
MOBILEYE UPWARDLY MOBILE
Oil prices continued under pressure, with the main US futures contract lowing ground again, extending last week's losses of about nine percent.
Investors are nervous because of a surprisingly big jump in US stockpiles, increased US shale production and concerns about implementation of a OPEC-Russia led deal to cut output .
"For all the somewhat hopeful talk from industry experts about oil inventories running down later in the year, the fact remains that US shale has come back harder, faster and cheaper than anyone could have imagined," said Jeffrey Halley, senior market analyst at Oanda trading group.
"Talk is cheap, and oil is getting cheaper as well."
Among individual stocks, Dow member Intel dropped over two percent percent after the company said it would buy Israeli car technology firm Mobileye a deal worth more than US$15 billion.
But Mobileye shares, also quoted on Wall Street, surged by a whopping 29.5 per cent.