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World stocks hover near peaks, dollar extends slide

Oil prices firm modestly, set for weekly gain.
NEW YORK- A global stock market index hovered near record highs on Friday, wrapping up a week when many of the world’s biggest economies either raised interest rates or signaled they might do so, underlining confidence about economic growth and inflation.

The U.S. dollar fell, continuing its slide in the wake of the Federal Reserve’s decision on Wednesday to boost interest rates but maintain a gradual pace of hikes this year.

Investors were also watching a meeting of world finance chiefs in Germany beginning on Friday, where topics such as economic reform, protectionism and exchange rates are expected to be on the agenda.

MSCI’s all-country world stock index was little changed on the day but traded near an all-time high.

The Fed raised rates for the second time in three months on Wednesday, while China followed with its own hike on Thursday, and then Britain and a European Central Bank policymaker hinted at higher rates.

“It looks like the rest of the central banks may be thinking about tightening up a little bit,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

“It confirms that growth is improving both domestically and globally, which is what everyone has been looking for…They wouldn’t be doing that if their economies still needed aggressive monetary stimulus.”

Wall Street’s main indexes fell slightly in morning trading. Amgen shares tumbled 6.7 percent after data on the biotechnology company’s cholesterol drug came in at the low end of investor expectations.

The Dow Jones Industrial Average fell 6.94 points, or 0.03 percent, to 20,927.61, the S&P 500 lost 1.64 points, or 0.07 percent, to 2,379.74 and the Nasdaq Composite dropped 6.50 points, or 0.11 percent, to 5,894.26.

The pan-European STOXX 600 index slipped 0.1 percent. European bank stocks touched their highest point in more than a year after an European Central Bank policymaker kindled talk of a possible rate hike.

The ECB will decide later whether to raise interest rates before or after ending its bond purchase program, policymaker Ewald Nowotny told a newspaper.

The dollar edged 0.1 percent lower to a fresh five-week low against a basket of currencies. The greenback remained under pressure for a third straight session after the Fed quashed hopes for a further bull run in the currency by keeping a gradual pace to its monetary tightening policy.

“At the moment, the dollar remains in correction mode,” said Fawad Razaqzada, market analyst at in London.

Data on Friday showed a steadily improving U.S. economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well.

U.S. Treasury yields edged lower after data showing low inflation in March suggested that the Fed could potentially lower its forecasts for interest rate increases this year.

Prices for benchmark 10-year Treasuries gained 8/32 to yield 2.497 percent, from 2.524 percent late on Thursday.

Oil prices firmed slightly and looked set to finish the week with a modest gain after losing almost 10 percent last week.

Brent crude was up 0.1 percent at $51.79 a barrel. U.S. light crude rose 0.1 percent to $48.81 a barrel.

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Connett Nthupi

Connett Nthupi

Masthead Financial Planning
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Moneyweb Investor Issue 26

Yes, recession is stifling the economy and dirty politics darkens our discourse, but that is today. There are those who are planning for a better, brighter tomorrow. We talk to Chris van der Merwe, founder of Curro, about how he plans to transform tertiary education for the greater good with his new company, Stadio.

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