Thursday, 21 April 2011

Thailand raises rates, global stocks jump

Thailand raised interest rates on Wednesday. AFP/CNA reports:

Thailand's central bank raised its official interest rate Wednesday for the sixth time in less than a year in an attempt to contain inflation.

The Monetary Policy Committee (MPC) voted six to one to increase the official cost of borrowing to 2.75 percent, up from 2.50 percent previously, and said in a statement it was ready to take further action if needed.

Not that global investors cared too much. From Bloomberg:

Global stocks staged the biggest rally of 2011 and the Dow Jones Industrial Average reached an almost three-year high amid better-than-estimated results at companies from Intel Corp. (INTC) to United Technologies Corp. and L’Oreal SA. Gold jumped to a record as the dollar slid.

The MSCI World (MXWO) Index jumped 2 percent at 4 p.m. in New York, the biggest increase since Nov. 4, and emerging-market shares rallied the most in 10 months. The Standard & Poor’s 500 Index climbed 1.4 percent. The U.S. currency weakened versus all 16 major peers, dragging the Dollar Index to the lowest level since November 2009. Ten-year U.S. Treasury yields rose four basis points to 3.41 percent. Sugar and nickel led commodities higher and gold traded above $1,500 an ounce for a second day.

The report on US existing home sales in March didn't spoil investors' mood.

Stocks extended gains after sales of previously owned U.S. homes increased 3.7 percent to a 5.1 million annual rate in March, exceeding the 5 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed. The median price declined from a year earlier, and 40 percent of the sales were distressed properties.

Meanwhile, on the European sovereign debt front, there was some good news from Spain. From Bloomberg:

Spain sold 3.4 billion euros ($4.9 billion) of bonds and demand rose even as its borrowing costs increased amid expectations Greece may restructure its debt.

The Treasury said it sold 2.49 billion euros of 10-year bonds at an average yield of 5.472 percent, compared with 5.162 percent at the previous auction on March 17. It also sold 885 million euros of bonds maturing Jan. 31, 2024 at 5.667 percent.

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