Global Markets Stocks fly after U.S. data, Fed official cools on rate hike

by **Cals** Fri 28 Aug 2015, 04:08

Global Markets
Stocks fly after U.S. data, Fed official cools on rate hike

NEW YORK/TOKYO (Aug 27): Stock markets around the world rallied on Thursday, helped by strong U.S. economic data and after a U.S. Federal Reserve policymaker hinted Wednesday that a September interest rate hike was unlikely.
All three major U.S. indexes were up more than 1% and increased appetite for risk also lifted crude oil prices, while the price of government bonds and the Japanese yen fell.
"The bounce in Wall Street and stabilization in Asia are causing the market to rally back," said Clairinvest fund manager Ion-Marc Valahu. "My short-term indicators are telling me that we hit a bottom in the market earlier this week."
Annual U.S. gross domestic product growth was revised to 3.7% from the 2.3% rate reported last month and last week's jobless claims fell more than expected.
New York Fed President William Dudley had said Wednesday that arguments for a September rate increase "seems less compelling" than only weeks ago, given the threat posed to the U.S. economy by recent market turmoil.
Markets around the world plunged earlier in the week as a slump in Shanghai shares fuelled worries over China's economic health. While Beijing moved to ease policy late on Tuesday, stocks still ended weak that day, but Wall Street staged a strong comeback late Wednesday and its biggest daily gain in four years helped to calm investor nerves overseas.
The two main Chinese indices surged 5.3% and 5.9% on Thursday, snapping a five-day losing streak that had wiped around 20% in market value and sent tremors around global financial markets.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.7%, pulling away from a three-year low reached earlier in the week and chalking up its best day in almost three years.
Tokyo's Nikkei ended up 1.1%, adding to the previous day's 3.2-% gain, after U.S. stocks racked up their biggest one-day gain in four years.
In Europe the FTSEuroFirst index of leading European companies was up 3.2 percent. Germany's DAX and France's CAC 40 were also up around 3%. Britain's FTSE 100 was up 3 percent.
The Dow Jones industrial average rose 157.04 points or 0.96% to 16,442.55, the S&P 500 gained 21.74 points or 1.12% to 1,962.25 and the Nasdaq Composite added 55.14 points or 1.17% to 4,752.68.
U.S. Treasuries prices fell with most yields rising to one-week highs after the government upgraded its reading on second-quarter economic growth.
Dudley's comments came amid alarming market volatility and just before many of the world's top central bankers gather at an annual conference in Jackson Hole, Wyoming. Investors will be watching the conference for clues on how the turmoil may shake up policy plans.
Emerging markets stocks and currencies rebounded with MSCI's benchmark emerging market stocks index up 3.1%.
Ukraine's central bank became the 39th monetary authority to ease policy this year, cutting interest rates to 27%, from 30%, to support flagging growth. Ukraine also reached a deal to restructure $18 billion of debt.
The Japanese yen fell as investors rediscovered their appetite for risk and the dollar rose 0.4% back above 120 yen, recovering from a seven-month low on Monday.
The euro slipped against the dollar to $1.1300. It had lost 1.7% in the previous session when a European Central Bank official said falling commodity prices and overseas economic weakness could cause the ECB to miss its inflation target. The euro had hit a seven-month peak of $1.1715 on Monday.
Crude oil rebounded. U.S. crude futures bounced 4.3% to $40.26 a barrel. The contracts had slumped to a 6 1/2-year low on Monday, dogged by a supply glut and China worries. Brent rose 4.3% to $45.
Copper was up about 2%, moving further away from Monday's six-year low. Spot gold rose was down 0.4%, but above the previous days lows.