Global markets reacted positively to Yellen’s dovish tone because it emphasised a gradual approach to normalising monetary policy. Energy stocks got a boost out of higher crude oil prices following a decline in U.S. crude supplies and robust Chinese demand. One of the best performers on the ASX 200 index was Automotive Holdings Group. One of its competitors, AP Eagers, raised its earnings guidance unexpectedly and this boosted stocks in the automotive industry in general.
In global markets, Wall Street was fairly cautious at the beginning of the week as a result of the Russian question but this was largely brushed aside with indices climbing into the black later in the week. The Dow closed at a record high on Thursday for the 24th time in 2017. The index was led by gains in the financial sector ahead of profit reports due out on Friday from several big banks. The Nasdaq also extended its winning streak. In economic news, first time jobless claims in the U.S. fell by 3,000, reflecting an extremely low level of layoffs that has become the norm as an economic recovery stretches into its ninth year. European markets were higher despite disappointing data out of the UK including manufacturing and the trade balance.
Asian markets were higher as well following Janet Yellen’s dovish comments. The Australian dollar was higher against major global currencies this week, pushing through US77c to reach levels not seen since March. The Australian dollar was supported by strong Chinese data which reflected strong foreign and domestic demand. The U.S. dollar was also weaker as a result of Yellen’s dovish comments.
