(MENAFN– ecpulse)
European stocks were trading higher in early trades Monday after hawkish Lawrence Summers announced he withdrew from the race for Federal Reserve chairman, the move downplayed chances for rapid Fed tapering fueling gains across the board.
Former Treasury Secretary Lawrence Summers withdrew his nomination to succeed Ben Bernanke and lead the Federal Reserve as the FOMC prepare for their two day policy meeting starting Tuesday in which they will discuss withdrawing stimulus. Summers withdrawal was positive for markets as he was seen more hawkish than Bernanke and expected to have led an earlier exit of Fed stimulus.
Summers was the most favored for the Fed chairman post and with his withdrawal expectations are now for Janet Yellen to be the favorite candidate for the post. Yellen is seen by markets more likely to walk in Bernanke’s footsteps and continue to favor growth supportive policies.
- STOXX 600 is trading at the highest since June adding 0.70% at 313.67
- STOXX 50 is trading higher by 0.94% at 2893.93
The gains spread across the board and in Germany, the gains overshadowed any election tension to extend German equity rallies, push DAX to a fresh record above 8,600.
- DAX fresh record high at 8626.11 trading now higher by 1.15% at 8607.69
We can see relief gains for now on eased tapering bets by the fed, especially after disappointing retail sales capped trading last week. The FOMC start their two day meeting Tuesday and markets forecast the Fed to slow their monthly asset purchases to $75 billion from the current $85 billion.
Easing Syria tension also added to relief gains after weekend progress in Syria talks between US Secretary of State John Kerru and Russian Foreign Minister Sergei Lavrov on how to secure and destroy Syria’s chemical weapons. The deal also provided Assad one week to submit details of the weapon inventory followed by an inspection in Syria by November.
- CAC 40 is trading higher by 0.80% at 4147.57
- FTSE 100 is trading higher by 0.71% at 6630.25
- FTSE MIB is trading higher by 0.75% at 17679.60
- IBEX 35 is trading higher by 0.92% at 9023.40
We still expect to see more volatility with the attention heading toward the Federal Reserve and the FOMC decision on Wednesday, a final decision to slow monthly purchases will have its weight on the market and trigger the bearish correction and delaying the tapering decision will further support gains this week.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.