LONDON, 11 August 2004 — The dollar fell yesterday against major currencies on market jitters ahead of the Federal Open Market Committee’s decision on US interest rates.
The single European currency rose to 1.2306 dollars in late European trading from 1.2269 late on Monday in New York. The dollar was being traded at 110.85 yen against 110.67 on Monday.
Meanwhile, although the pound benefited from the dollar’s weakness, it fell against the euro, hit by lower-than-expected inflation figures and a widening of the British trade deficit, making aggressive interest rate hikes in Britain less likely. Elsewhere, the euro and the Swiss franc benefited as investors switched to safe-haven currencies on the back of continuing worries over the ever-increasing price of oil.
Meanwhile, European stock markets rebounded yesterday. The British FTSE 100 index rose 0.85 percent to 4,350.9 points, the German DAX 30 climbed 0.82 percent to 3,720.64, while the French CAC 40 advanced 1.02 percent to 3,533.06 a day after falling to its lowest level since December 2003. The DJ Euro Stoxx 50 index of leading euro zone shares advanced 0.23 percent to 2,602.43 points.
The Swiss SMI index gained 0.46 percent to close at 5,383 points. The Amsterdam AEX added 1.01 percent at 316.24 points, the Brussels Bel-20 rose 0.94 percent to 2,475.27, the Madrid Ibex-35 edged up 0.28 percent to 7,654.7 and the Milan Mib30 ended 0.61 percent higher at 26,701.0.
US stocks rose yesterday after the Federal Reserve hiked interest rates.
About one hour after the Fed announcement, the Dow Jones Industrial Average of 30 top stocks was up 95.41 points, or 0.97 percent, at 9,910.07. The broader Standard and Poor’s 500 index rose 10.11 points, or 0.95 percent, to 1,075.33. The technology-heavy NASDAQ index gained 22.01 points, or 1.24 percent, to 1,796.65. Bond prices dipped in the wake of the rate news.
The yield on the 10-year US Treasury bond spiked to 4.274 percent from 4.246 percent just before the Fed announcement, while that on the 30-year bond rose to 5.055 percent against 5.039 percent before the rate news.
The Tokyo stock market ended higher yesterday. The 225-issue Nikkei average ended at 10,953.55, up 44.85 points, or 0.41 percent. The Topix index of all first section issues added 3.45 points, or 0.31 percent, to stand at 1,105.02.
The Hang Seng share index slipped in cautious trade ahead of a widely expected hike in US interest rates. The index ended down 0.48 percent or 59.37 points to 12,408.04.
In Sydney, stocks fell, extending their decline to five straight sessions with blue chips struggling as oil prices hit a record high. The benchmark S&P/ASX 200 index fell 0.27 percent or 9.6 points to 3,499.6.
In Johannesburg, the JSE all share index shed 0.46 percent or 47.10 points to 10,180.41 points. The All Gold index closed at 1,654.93 points, down 27.94 or 1.66 percent, while the Industrial index closed at 7,227.25 points, down 54.11 or 0.74 percent.