Optimism Spreads Across Global Markets, as Rising Stock Markets Boost Risky Assets

By FXEmpire.com

Optimism spread through global financial markets on Monday, leading global equity markets to rise, which supported confidence among traders and boosted demand for higher yielding assets, as Japan reported a better than expected economic contraction during the second quarter of this year, which encouraged investors to target risky assets.

Moreover, Google announced it agreed a deal to buy Motorola Mobility Holdings Inc for $12.5 billion in cash, where the deal was struck at $40 per share, offering more than 60% in premium, which boosted confidence among traders, as stock valuations dropped to multi-year lows after the recent selloff.

The United States though released the empire manufacturing index for the month of August, where the empire manufacturing index showed a bigger than expected contraction, however, markets shrugged the empire manufacturing report and focused on the positive data.

Stocks in the United States rose by opening on Monday, where the Dow Jones Industrial Average was up by nearly 1.20% to trade around 11,405, while the S&P 500 index was up by nearly 1.35% to trade around 1194. European stock indexes were higher as well before closing on Monday, where FTSE 100 was up by nearly 0.85% to trade at 53644and the DAX was up by nearly 1.15% to trade around 6067.

The U.S. dollar fell against a basket of major currencies on Monday, where the U.S. dollar index was trading at 73.97, compared with the opening level at 74.48. The Euro gained strongly against the Dollar, where the EUR/USD pair rose to trade at $1.4451, compared with the opening level at $1.4283, and the British Pound extended its gains against the Dollar for a third day, where the GBP/USD pair traded around $1.6373, compared with the opening level at $1.6283.

Gold prices extended the drop for a third day on Monday after rising to a new record high above $1800 an ounce last week, as gold dropped to trade around $1739 an ounce, and crude oil prices extended the rise to trade around $86 a barrel.