NEW YORK, TOKYO and HONOLULU (HawaiiNewsNow) - Global stock markets rose, the dollar fell, and oil pushed $100 a barrel, on the new Fed stimulus announcement and developments in Europe and Asia.
The Dow gained 200 points as stock indexes rose to their highest levels in years after the Fed said it would spend $40 billion a month buying mortgage-backed securities for as long as it took to stimulate the economy. Overnight, the Nikkeiwas up almost 2 percent, topping 9,100, and Friday morning there were similar gains in London, Paris and Frankfurt.
U.S. benchmark crude oil touched $100 a barrel and was close to that level Friday morning, partly because an improving economy would increase oil consumption, but mostly because the lowest interest rates the Fed is pushing for in the bond market would make it more attractive for investors to move their money into commodities futures, including oil. That shifting into commodities could also accelerate the increase in food prices that has been widely predicted as a result of drought, since corn and soybeans futures prices were already soaring.
The dollar fell on the news that the Fed would effectively be creating hundreds of billions more dollars in its stimulus, and the euro rose as a result, but Friday morning the euro fell again after a European publication ran an interview with a Greek official - he later said he was misquoted - asserting that Greece would need a third bailout because it met only 22 percent of financial targets from the second bailout. The second bailout forgave more than half of Greece's debt outright but demanded tax hikes and government layoffs in return. Greek labor unions planned weekend demonstrations against those austerity measures.
Hawaii stocks mostly rose with the rest of the market after the Fed announcement. Transportation stocks from Horizon Lines to Delta Air Lines bucked the trend, however, possibly because of the upward effect on oil prices. Hawaii gasoline prices have been rising steadily lately, although mainland pump prices have been rising faster.
In a fresh factor affecting oil prices, Tokyo news media reported Friday that the Japanese cabinet had voted on a new government policy to phase out nuclear power, which generated a third of Japanese electrical power because the Fukushima disaster that followed the 2011 earthquake and tsunami. Japanese citizens lost faith in nuclear power after learning that TEPCO, the company that owned the Fukushima plant, had cut costs by placing the fuel tank for emergency back-up cooling at the water's edge, where it was the first thing the tsunami took out.