LONDON – World stocks rose Thursday as a holiday in China gave investors a break from its torrid markets and the European Central Bank was expected to confirm its willingness to provide more stimulus to the eurozone, if needed.
KEEPING SCORE: In Europe, France’s CAC 40 was up 1.2 per cent to 4,608.24 and Germany’s DAX added 1.5 per cent to 10,195.17. Britain’s FTSE 100 gained 1.5 per cent to 6,171.81. Futures augured more gains on Wall Street after the previous day’s rebound from sharp losses. Dow and S&P 500 futures both rose 0.3 per cent.
CENTRAL BANKS: Attention is turning to the European Central Bank’s meeting on Thursday as weak commodity prices and slowing global growth work against its efforts to stimulate inflation and economic growth. Some analysts think the ECB might need to expand its 1.1 trillion euro ($1.2 trillion) of stimulus to stoke inflation but most aren’t expecting any tweaks to that policy to be announced imminently. The U.S. Federal Reserve, which has been inching toward its first rate hike since the 2008 financial crisis, is also flashing on the radar of investors as its policy meeting set for Sept. 16-17 approaches. Market expectations for a September rate hike have diminished because of signs of weakening global growth and the turbulent sell-off in Chinese stock markets.
THE QUOTE: “Market pricing for a rate hike at the Fed’s September meeting is steadily being unwound: it now sits at 30 per cent,” said Angus Nicholson, market analyst at IG in Melbourne, Australia. “This may see an ebbing of strength in the U.S. dollar,” he said in a market commentary. “However, all bets are off for what will happen on Monday with the reopening of China’s stock markets.”
EUROZONE DATA: European markets were also buoyed by upbeat economic figures. The purchasing managers index, a broad gauge for business activity, rose for the 19-country to a four-year high in August. Retail sales, meanwhile, grew 0.4 per cent in July, more than making up for a 0.2 per cent drop in June. The reports together show the eurozone held up against the uncertainty over China’s economic slowdown and benefited from a decrease in concerns over Greece.
ASIAN SCORECARD: Japan’s Nikkei 225 rose 0.5 per cent to 18,182.39 and South Korea’s Kospi was little changed at 1,915.13. Stock markets in Southeast Asia also rose while Australia’s S&P/ASX 200 shed 1.4 per cent to 5,027.80. New Zealand’s benchmark also fell. Taiwan’s main index added 0.8 per cent to 8,095.95 and India’s Sensex jumped 1.3 per cent to 25,783.21. Markets were closed in China, which has suffered a dramatic slide since June, and in Hong Kong.
ENERGY: Benchmark U.S. crude was down 5 cents at $46.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 84 cents to close at $46.25 a barrel in New York after an Energy Department report showed a decline in fuel supplies, which suggests rising demand.
CURRENCIES: The euro climbed to $1.1229 from $1.1216 on Wednesday. The dollar fell to 120.16 yen from 120.61 yen.