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GLOBAL MARKETS-Stocks surge on Fed pledge to pause, dollar slips

Published 31/01/2019, 07:22 am
© Reuters.  GLOBAL MARKETS-Stocks surge on Fed pledge to pause, dollar slips
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(Adds reaction after Fed statement, oil settlement prices)

* Investment see buy signal in Fed statement

* Bond yields and dollar slip after statement

* Apple, Boeing (NYSE:BA) results provide comfort

* Eyes also on US-China talks in Washington

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Herbert Lash

NEW YORK, Jan 30 (Reuters) - The dollar slid and equities surged on Wednesday, fueled at first by Boeing and Apple's results and later by the Federal Reserve pledging to be patient with future interest rate hikes, a change in tone stock investors interpreted as a buy signal.

The Fed held interest rates steady at the end of a two-day meeting in which it struck language in a December policy statement that projected "some further" rate hikes would be appropriate in 2019.

U.S. stocks extended their gains and bond yields fell as markets got what they were hoping for, said Mohamed El-Erian, chief economic adviser at Allianz (DE:ALVG) in Newport Beach, California.

"This marks a full 180 from what the Fed was signaling just a few months ago," El-Erian said.

Scott Minerd, global chief investment officer at Guggenheim Partners in Santa Monica, California, said the Fed's pause will further extend the economic expansion, allowing excesses to continue to build and increasing risks of financial instability.

"The Fed refilled the punch bowl and the party goes on. Buy risk assets," Minerd said.

The MSCI world equity index .MIWD00000PUS , which tracks share performance in 47 countries, rose 1.39 percent following gains in Asia overnight. The FTSEurofirst 300 index .FTEU3 of leading shares in Europe closed up 0.41 percent.

The Dow Jones Industrial Average .DJI rose 524.73 points, or 2.13 percent, to 25,104.69. The S&P 500 .SPX gained 50.13 points, or 1.90 percent, to 2,690.13, and the Nasdaq Composite .IXIC added 172.63 points, or 2.46 percent, to 7,200.92.

Upbeat results from Boeing BA.N and Apple AAPL.O late on Tuesday provided investors early relief as they awaited the Fed statement and as U.S.-China trade talks started in Washington.

Boeing shares jumped after the world's largest planemaker raised its profit and cash flow expectations for 2019 amid a boom in air travel. Boeing also indicated it had overcome supplier delays that snarled 737 production last year.

Apple results provided some reassurance as the iPhone maker reported sharp growth in its services business. shares rose 6.63 percent and Apple gained 7.31 percent.

Oil prices rose, paring gains of more than 1 percent, as the potential for supply disruptions following U.S. sanctions on Venezuela's oil industry lifted prices.

Stocks listed in London jumped more than 1 percent after British lawmakers late on Tuesday rejected a proposal in Parliament that aimed to prevent a potentially chaotic "no-deal" Brexit, a vote that initially pushed sterling sharply lower.

The exporter-heavy FTSE 100 .FTSE in London rose 1.45 percent as its components often are boosted by a weaker pound because its multinational companies earn a large portion of their revenue abroad in foreign currency.

Sterling GBP= rose 0.04 percent to $1.3071 after sliding about 0.7 percent against the dollar and the euro following parliamentary votes on Brexit.

"The vote is not fundamentally changing the way the market's talking about Brexit," said Hetal Mehta, Legal & General Investment Management senior European economist.

Payrolls processor ADP (NASDAQ:ADP) reported that the U.S. private sector added 213,000 jobs in January, which beat forecasts for gains of 178,000. But the monthly total was lower than the 271,000 jobs added in December. dollar index fell 0.50 percent to 95.343 .DXY . Against the yen JPY= , the dollar fell 0.44 percent to 108.90.

The euro EUR= gained 0.53 percent to $1.1491.

Benchmark 10-year U.S. Treasury notes US10YT=RR rose 4/32 in price to push yields down to 2.6954 percent.

U.S. West Texas Intermediate crude futures CLc1 gained 92 cents to settle at $54.23, while international Brent crude futures LCOc1 rose 33 cents to settle at $61.65 per barrel.

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