Global equity markets pushed higher Wednesday as stabilizing commodity prices and hopes for additional monetary stimulus lifted most bourses again after Tuesday’s big rally.
The gains were strongest in Asia, where markets continued to cheer a stimulus measure Monday by the People’s Bank of China (HKSE: 3988-OL.HK – news) to cut its reserve requirement for banks. The Shanghai index jumped 4.3 per cent, while Japan’s Nikkei index climbed 4.1 per cent.
London’s FTSE index fell slightly, but both Paris and Frankfurt notched modest gains ahead of a European Central Bank meeting next week that many expect to result in additional monetary stimulus.
Spreadex analyst Connor Campbell cited expectations for the ECB move, along with the Chinese central bank’s action Monday as factors that have combined into an investor-reassuring cocktail, for now at least. US stocks were in the red much of the session, but pushed higher after oil prices turned positive.
The S&P 500 climbed 0.4 per cent, with petroleum-linked stocks leading the way. “Oil reversed and that still seems the name of the game,” said Mace Blicksilver, director of Marblehead Asset Management. Other key commodities have also strengthened.
“Oil, copper and iron ore have all stopped going down and that has calmed a few nerves about both economic growth and the banks? exposure to these industries,” said Russ Mould, investment director at trading firm AJ Bell.
US stocks got additional support from a report Wednesday from payroll firm ADP reported that US private sector businesses added 214,000 jobs in February, better than the 190,000 expected by analysts.
The ADP report came ahead of Friday’s US Department of Labor February jobs report, which analysts expect to show the US economy added 190,000 jobs during the month.
– Bank, commodity shares gain –
Commodity-linked shares were strong, with London-listed BHP Billiton (NYSE: BBL – news) rising 5.1 per cent, French steel company ArcelorMittal 7.6 per cent and US aluminum producer Alcoa (NYSE: AA – news) 5.6 per cent.
Banking stocks were another strong group, with Deutsche Bank (LSE: 0H7D.L – news) rising 5.1 percent, HSBC 2.3 per cent and Bank of America (Swiss: BAC.SW – news) 2.1 per cent.
Agricultural giant Monsanto (Hamburg: 1132157.HM – news) fell 7.8 percent as it slashed its profit forecast for 2016, citing the effects of the strong dollar, weak commodity prices and a delay in US regulatory approval of the diambic herbicide.
Morningstar (NasdaqGS: MORN – news) analyst Jeffrey Stafford said the weak Monsanto outlook is an indication of the need for greater-than-expected discounting of seeds as farmers endure a downturn that has depressed incomes.
In Japan, shares of exporters rose behind a drop in the yen. Uniqlo operator Fast Retailing rose 6.5, while Toyota gained 3.5 percent and Sony (Hanover: SON1.HA – news) 5.2 percent.
– Key figures around 2200 GMT –
New York:
Dow: UP 0.2 per cent at 16,899.32 (close)
S&P 500: UP 0.4 per cent at 1,986.45 (close)
Nasdaq (NasdaqGS: NDAQ – news): UP 0.3 per cent at 4,703.42 (close)
London:
FTSE 100: DOWN 0.1 per cent at 6,147.06 points (close)
Frankfurt:
DAX 30: UP 0.6 per cent at 9,776.62 points (close)
Paris:
CAC 40: UP 0.4 percent at 4,424.89 points (close)
EURO STOXX 50
UP 0.9 per cent at 3,022.14 points (close)
Tokyo
Nikkei 225: UP 4.1 per cent at 16,746.55 points (close)
Shanghai
Composite: UP 4.3 per cent at 2,849.68 points (close)
Hong Kong
Hang Seng: UP 3.1 per cent at 20,003.49 points (close)
Euro/dollar: DOWN at $1.0865 from $1.0867 on Tuesday
Dollar/yen: DOWN at 113.46 yen from 113.94 yen
