Dollar fades in London trading before Fed policy decision Rand rallies; Currencies of commodity producers jump with oil Share on Facebook Share on Twitter Stocks rallied around the world as tweaks to the Bank of Japan’s monetary stimulus offered support to financial institutions. The dollar slipped before a Federal Reserve policy decision, while crude rallied in advance of next week’s meeting of oil producers. Banks and insurers led gains in equities as the BOJ refrained from cutting interest rates further below zero and shifted the focus of its stimulus to controlling the yield curve. The decision’s impact was less enduring for the yen and government bonds, which erased losses after sliding in the immediate aftermath. South Africa’s rand rose for a sixth day, the longest streak of gains since March 2014. Oil rose a third day after Algeria said OPEC may turn forthcoming informal talks into a formal session. The BOJ plans to maintain 10-year yields in the nation at around the current level of close to zero, it said Wednesday, giving it scope to keep loosening policy to revive growth and inflation, while limiting the negative impact on financial companies’ earnings. The BOJ faced a backlash after first deploying negative rates in January, with Governor Haruhiko Kuroda acknowledging it cut into the profits of lenders and insurers by driving long-term yields lower. Next, investors will be looking to the U.S. for any signals regarding the timing and pace of future Fed hikes, with all but four of 102 economists surveyed by Bloomberg predicting policy makers will hold off from raising interest rates. “Central banks are acknowledging that excessively negative rates are damaging to bank profitability,� said Michael Hewson, a market analyst at CMC Markets in London. “There is a perception that maybe what the Bank of Japan is looking to do could be a template for the European Central Bank and potentially the Bank of England.� Monetary authorities will continue to command attention on Thursday with speeches due from the new governor of the Reserve Bank of Australia as well as the heads of the European Central Bank and the Bank of England. In addition, central banks in countries including New Zealand, Norway and South Africa have policy decisions due that day. The MSCI All-Country World Index rose 0.5 percent as of 8:35 a.m. New York time, with the Stoxx Europe 600 Index gaining 0.8 percent and the MSCI Asia Pacific Index up 2 percent. The yen strengthened 1.1 percent to 100.67 per dollar, after earlier falling 1.1 percent. West Texas Intermediate Crude advanced 1.8 percent to $44.84 a barrel. Stocks Japan’s Topix index jumped 2.7 percent, with gauges of banks and insurers soaring more than 5 percent, on optimism higher long-term bond yields will alleviate a squeeze on their profits. The Topix rose by more than the Nikkei 225 Stock Average as Japan’s central bank said its on-going purchases of exchange-trade funds will be concentrated more heavily on the broader benchmark. Japanese markets will be shut Thursday for a holiday. Lenders and insurers posted the biggest gains of the European equity benchmark’s 19 industry groups after the BOJ decision. Banco Popolare SC ended a five-day losing streak, rising 6.7 percent. Banco Santander SA advanced 3 percent after a report that it ended talks with Royal Bank of Scotland Group Plc to buy Williams & Glyn. Deutsche Bank AG was among banks posting the worst performance, holding a three-day loss amid ongoing legal woes and investor concern over its capital base. The bank’s additional Tier 1 bonds, the first to take losses in a crisis, rebounded with its 1.75 billion euros ($2 billion) of 6 percent bonds gaining three cents on the euro to 77 cents. They fell to the lowest since February on Tuesday. S&P 500 Index futures added 0.4 percent, after U.S. equities closed Tuesday little changed for a second day, amid another afternoon selloff. Adobe Systems Inc. rose 5.1 percent in European trading after forecasting fiscal fourth-quarter profit that will exceed analysts’ estimates. Emerging market shares climbed after the BOJ announcement, led by materials producers. Gold miner AngloGold Ashanti Ltd. added 3.4 percent in South Africa after a court granted six companies approval to to appeal against a court ruling on liability associated with lung disease. Currencies The Bloomberg Dollar Spot Index slipped 0.3 percent, falling from near its highest level since July. The BOJ said that the monetary base target, which previously had been set at annual increases of 80 trillion yen ($780 billion), may now fluctuate in the short term as policy makers seek to control the yield curve. It also pledged to expand the monetary base until inflation is stable above the 2 percent target. Currencies of commodity exporters led gains among developed-market nations. The Australian dollar added 0.5 percent, while the Norwegian krone climbed 0.3 percent. The rand rose 1.5 percent to a one-month high of 13.72 per dollar for a sixth-straight day of gains amid speculation Anheuser-Busch InBev SA has started buying the currency to pay local shareholders for its $104 billion acquisition of SABMiller Plc. South Africa’s consumer inflation rate fell below the upper limit of the central bank’s target range in August for the first time this year, data showed Wednesday. The rate declined to 5.9 percent, from 6 percent a month earlier. Bonds Treasuries, which dropped after the Bank of Japan announced its policy changes, were little changed as traders awaited the Fed’s decision. The yield on 10-year notes was at 1.68 percent, after earlier climbing to 1.73 percent, while that on 30-year securities was 2.42 percent, having jumped to 2.49 percent. Futures traders are pricing in just a 22 percent likelihood the Fed will lift its policy rate by 0.25 percentage point on Wednesday, based on the assumption that the effective fed funds rate will trade at the middle of the new Federal Open Market Committee target range after the next increase. That’s down from more than 40 percent in late August. Germany’s 30-year bunds pushed higher for a fourth day, with the yield slipping one basis point to 0.55 percent. Commodities OPEC ministers can transform next week’s gathering into an extraordinary meeting if they wish, Algerian Energy Minister Noureddine Bouterfa said on public radio Tuesday. Surplus production of about 1 million barrels a day needs to be cut to re-balance markets and stabilize prices, he said. The meeting in Algiers next week probably won’t clinch a deal to limit output, according to a Bloomberg survey. Brent added 1.7 percent to $46.64. Oil was also boosted by weekly industry data showed U.S. crude inventories declined. Gold bullion for immediate delivery rose 1 percent to $1,328.03 an ounce, having earlier dropped as much as 0.5 percent. Silver added 2.3 percent. Copper fell 0.5 percent to $4,768.50 a metric ton. Nickel erased losses after the Philippines intensified a crackdown on mines in the world’s largest producer and commodities giant Glencore Plc said it was bullish on the metal.

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