It's 'risk on' again, thanks to Yellen
Incoming Fed chairman's comments this week spark two all-time highs on Wall Street, and a 24-point gain for STI
JANET Yellen hasn't yet assumed the role of chairman of the US Federal Reserve but already she is wielding an influence on financial markets. Her comments during the week, widely interpreted as indicating that the Fed will continue pumping money into the system via its QE (quantitative easing) programme, have soothed worries that if the money printing stops, then stocks might actually have to rise or fall on fundamental or economic factors.
Now, thanks to reassurances from the incoming Fed chair that the taps will remain open, it's "risk on" again - at least on Wall Street. US indices rose to two all-time highs on Wednesday and Thursday - first because Ms Yellen's thoughts were released ahead of her testimony to the Senate Banking Committee and then again when she actually stood before the committee. In response, the Straits Times Index (STI) gained 24 points or 0.8 per cent over the week, with the index yesterday rising 10.19 points to 3,201.27.
At her confirmation hearing on Thursday, Ms Yellen said it was "imperative that (the Fed does) what (it) can to promote a very strong recovery". Ms Yellen did not sound happy with the current state of affairs, saying that "it's important not to remove support, especially when the recovery is fragile" and that the labour market was still performing "far short" of its potential.
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