Shares perk up after global growth concerns subside

Filed on September 22, 2015
Shares perk up after global growth concerns subside
A Chinese investor eats lunch as she monitors stock prices at a brokerage house in Beijing. The Shanghai Composite index went up 1.9 per cent, defying the region's downtrend on Monday. - AP

Investors await September factory data from China and Europe

US stocks rose broadly in early trading on Monday as investors tried to look beyond the uncertain timing of a possible interest rate increase by the Federal Reserve. All 10 industry groups in the Standard and Poor's 500 index gained. Financial stocks climbed the most.

The Dow Jones industrial average rose 133 points, or 0.8 per cent, to 16,519. The Standard & Poor's 500 climbed 15 points, or 0.8 per cent, to 1,973 and the Nasdaq composite gained 42 points, or 0.9 per cent, to 4,868.

European stocks, the dollar and oil markets rebounded, pointing to a tentative recovery in confidence following another difficult day in Asia.

Asia's damage amounted to 1.5 to two per cent falls in Australia, Korea and Malaysia, but most of Europe's bourses had managed to shake off a shaky start to the day.

The pan-European FTSEurofirst 300 was up just over one per cent even though Germany's DAX was stuck in neutral as car giant Volkswagen reversed more than 20 per cent after it was found to have cheated US emission tests.

There was, however, brighter news after a clear election victory for the Syriza party in Greece on Sunday boosted hopes its bailout programme would stay on the road. An upgrade for Portugal's sovereign rating also helped the mood in southern eurozone bond markets.

Oil and metals markets also rebounded after falls at the end of last week, although emerging market stocks and currencies continued to struggle.

MSCI's EM benchmark index dropped 1.5 per cent while Malaysia's ringgit hit the skids again after the Wall Street Journal reported the US Federal Bureau of Investigation was looking into money-laundering at troubled Malaysian state fund 1MDB.

"Generally markets are a bit more positive today although nothing that suggests confidence in the wake of decisions by the Federal Reserve not to hike rates last week," said Michael Hewson at CMC markets in London.

Investors should get a good explanation this week as to exactly why the Fed did not raise rates last week, with its chair Janet Yellen among a host of other officials due to speak.

There will be closely watched economic data from both China and Europe that should also give a clearer picture as to exactly where the global economy is heading.

China was the sole Asian market to defy the region's downtrend on Monday, with the Shanghai Composite index up 1.9 per cent and the CSI300 rising 1.75 per cent.

Chinese Vice Finance Minister Shi Yaobin sought to soothe nerves about the recent 40 per cent slump in China's stocks, saying the volatility was a short-term issue and that its economy could maintain a healthy growth going forward.

In the currency market, the US dollar index, which fell after last Thursday's Fed decision, rose 0.7 per cent to 95.517, as it regained traction against both the yen and euro after an early wobble.

That rise, based on the idea that the Fed will raise US rates at some point, also pushed up US government bond yields after they had also fallen following the Fed meeting.

In Europe, German Bund and other benchmark yields were dragged up in the US slipstream as France's rating downgrade by Moody's on Friday added to the pressure on its bonds.

In contrast, Portuguese bonds made good ground after Standard & Poor's lifted its rating, and periphery markets in general got a boost from Syriza's election win in Greece.

Indian stocks advance

The S&P BSE 500 Index, a gauge of broad market, capped a third day of gains, while a gauge of small and medium-sized companies climbed for a second day.

The Sensex lost 0.1 per cent to 26,192.98 at the close in Mumbai, reducing an intraday loss of 0.9 per cent.

Most stocks advanced, led by lenders and industrials, amid speculation the Federal Reserve's decision to maintain its benchmark interest rates will pave the way for the nation's central bank to cut borrowing costs next week.

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