European equity markets rally in wake of Fed move; gold surges
By Polya Lesova, MarketWatch
LONDON (MarketWatch) — U.S. stock futures pointed to opening gains for Wall Street, as European equity markets rallied and the dollar fell sharply after the Federal Reserve announced a massive new bond-buying program in an effort to resuscitate the sluggish recovery.
Futures on the Dow Jones Industrial Average (DJZ10 11,245, +68.00, +0.61%) rose 61 points to 11,238 and S&P 500 futures (SPZ10 1,206, +8.20, +0.69%) advanced 7 points to 1,204.30.
The Fed announced plans Wednesday to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. It will also keep reinvesting principal payments from its securities holdings.
In Europe, stock markets rallied to multi-month highs on the Fed news, with the U.K. FTSE 100 index (UK:UKX 5,852, +102.91, +1.79%) surging 1.7%.
“The euphoric state of the markets is perhaps short-sighted,” said Phil Gillett from Spreadex Ltd in a note to clients.
“Yes, the QE [quantitative easing] should reduce borrowing costs and a weaker dollar help to boost manufacturing, [but] there is still the concern that the US economy is in such bad condition that it has had to revert back to QE,” he said.
The European Central Bank and the Bank of England are expected to demonstrate a sharply different approach from the Fed on Thursday, with both likely to keep policy unchanged.
Commodities also posted strong gains. Gold futures surged $26.20 to $1,363.80 an ounce in electronic trading on Globex.
In contrast, the greenback dropped against its major rivals, with the dollar index (DXY 75.88, -0.60, -0.78%) falling 0.8% to 75.868.
On the earnings front, Apache Corp. (APA 102.58, -0.54, -0.52%) , CBS Corp. (CBS 17.29, -0.06, -0.35%) and DirectTV (DTV 44.18, +0.09, +0.20%) are among the companies scheduled to report quarterly results. U.S. retailers will report same-store sales for October.
At 8:30 a.m. Eastern time, data on jobless claims and productivity will be released.
