World stocks hit record highs on Thursday and the
dollar dipped after the U.S. Federal Reserve signaled caution in
raising interest rates, while oil fell after top producers
extended output cuts for shorter than some in markets had
The S&P 500 and Nasdaq rose to new highs in early trading.
The benchmark index was up 3 points, or 0.16%, at 2,408.25 at
9:42 a.m. ET. The VIX “fear gauge” of expected volatility in the
S&P 500 opened at 9.82, its lowest since May 10.
European shares fell slightly. The pan-European STOXX 600 index
was last down 0.1 percent, led lower by basic resources and
energy companies. Steelmakers were hit after iron ore prices fell
for a third day, on concern over reduced Chinese demand.
Earlier, Asian stocks, as measured by MSCI gained
almost 1 percent to a two-year high. This helped push MSCI’s
46-country world stock index to a record high of 464.38. It last
stood at 463.78, up 0.2 percent.
Brent crude oil, the international benchmark, fell 58 cents, or
more than 1 percent to $53.38 a barrel after delegates said OPEC
had agreed to extend output cuts for nine months to fight a
global glut. The cuts are likely to be shared by a dozen non-OPEC
states. Some in the market had been expecting deeper cuts or a
“It is a disappointment that OPEC hasn’t done more to balance the
markets,” said Olivier Jakob, energy markets analyst at Swiss
consultancy Petromatrix. “A nine-month extension of the output
cuts is already baked into prices. This shows there’s not much
more OPEC can do.”
The dollar was down 0.1 percent against a basket of other major
currencies after the
minutes of the Fed’s May 2-3 meeting were released on
They showed policymakers agreed they should hold off on raising
rates until it was clear a recent slowdown in the U.S. economy
was temporary, though most said a hike was coming soon.
Fed staff proposed a plan to wind down the more than $4 trillion
of debt securities amassed as part of efforts to stimulate the
economy. In a move some investors cited as reassuring, the plan
included a limit on how much would be allowed to fall off the
balance sheet each month.
Federal funds futures imply traders see an 83 percent chance of a
rate rise in June and a 46 percent probability of two increases
by the end of 2017, according to the CME Group’s FedWatch tool.
U.S. Treasury yields dipped after the minutes, weakening the
dollar. The benchmark 10-year yield was down 1.6 basis point on
Thursday at 2.25 percent.
Euro zone borrowing costs also fell after what was seen as a sign
central banks would be wary of stepping back too quickly from
ultra-loose policies that have supported their economies.
Despite signs of economic recovery, many in markets worry that a
precipitate withdrawal of stimulus could cause turbulence.
“The BOJ (Bank of Japan) and the ECB (European Central Bank) are
the ones with the long-standing structural weaknesses and there
are bigger fears about the risk of a taper tantrum,” said Chris
Scicluna, head of economic research at Daiwa Capital Markets.
German 10-year government bond yields fell 4.1 basis points to
(Additional Reuters reporting by Hideyuki Sano in Tokyo, Kit
Rees, Ritvik Carvalho, Dhara Ranasinghe and Christopher Johnson
in London; Editing by Elaine Hardcastle)