Stocks and commodities rally as dollar drops

Global stocks rose on Thursday (February 4th) as a fall in the US dollar helped to lift beleaguered commodity markets and sent oil higher.

Equity markets in Europe rallied, with the FTSE 100 in London climbing 1.5 per cent, led by sharp gains for commodity producers. Anglo American rose by more than nine per cent, Glencore climbed seven per cent, while BHP Billiton and Rio Tinto both added six per cent.

Both the DAX in Germany and the CAC 40 in Paris were up 0.8 per cent early on in the session.

It came after a sharp reversal for oil led US stocks higher on Wednesday. US light crude rose eight per cent as a weaker dollar delivered a welcome boost for traders.

The greenback dropped after New York Fed president William Dudley fired another warning shot over higher rates.

According to MNSI, he said financial conditions were tightening and warned that a stronger dollar could have “significant consequences” for the US economy.

Dudley’s dovish remarks cooled demand for the dollar, which sank to a three-month low versus the euro, but helped lift US stocks higher in concert with oil.

The Dow Jones industrial average rose by more than one per cent, with Exxon Mobile Corp leading the way with a five per cent gain.

US light crude for March delivery on the Nymex in New York was up at $32.52 following a steep rise on Wednesday.

Hopes of a deal between OPEC and non-OPEC nations to cut production lifted the mood despite a supply report showing US crude inventories rose 7.8 million barrels last week to a record 502.7 million.

Ahead of the Bank of England interest rate decision and inflation report, the pound rose 0.25 per cent against the dollar to cement recent gains that had seen sterling add four cents in the last week.