While you were sleeping: Stocks rally on economic
While you were sleeping: Stocks rally on economic optimism
Dec. 2 (BusinessWire) – Shares in Europe and Wall Street rallied on renewed optimism about the global economy and an easing of concerns about the debt woes of Dubai.
The latest report on the U.S. economy, from the Institute of Supply Management, showed that the manufacturing sector grew for a fourth month in November.
“While the rate of growth slowed when compared to October, the signs are still encouraging for continuing growth as both new orders and production are still at very positive levels,” the ISM said in a statement.
The ISM manufacturing index fell to 53.6, lower than forecast. A reading above 50 signal expansion.
In a separate report, the U.S. housing sector, which has taken the brunt of the recession’s impact, received another boost. Pending home sales have now risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors.
The U.S. reports followed data that showed manufacturing advanced in both China and Europe too.
China’s manufacturing continued to advance in November, according to HSBC and the Chinese government. An index of manufacturing in the 16-nation euro area rose to 51.2 from 50.7 in October, London-based Markit Economics said overnight.
The Dow Jones Stoxx 600 Index added 2.6% 245.28 in London, as all 19 industry groups advanced. The measure has surged 24% this year amid signs the global economy is improving.
In midday trading, the Dow Jones Industrial Average was up 1.3% to 10,479.66 and the Standard & Poor’s 500 gained 1.29% to 1109.81. The Nasdaq Composite climbed 1.54% to 2177.64.
The rally on Wall Street was broadly based as commodity producers advanced alongside builders as well as retailers and financials.
Caterpillar rose 1.6% to US$59.35. Alcoa rose 1.3% to US$12.68, helping drive materials companies in the S&P 500 to the biggest gain among 10 industries.
Office equipment retailer Staples advanced 6.2% after it reported higher than expected adjusted third-quarter earnings and forecast sales growth in its fourth quarter.
AIG rallied after saying it cut its debt owed to the government by transferring stakes to the New York Fed in two overseas units. Its shares jumped 11%.
Among national benchmarks across Europe, the U.K.’s FTSE 100 rose 2.34% to 5312.17, Germany’s DAX rose 2.68% to 5776.61 and France’s CAC 40 increased 2.6% to 3775.74.
On the monetary policy, investors continue to wait for Thursday’s meeting of the European Central Bank.
The US dollar slid as concerns about Dubai’s debt woes eased and in the wake of the Reserve Bank of Australia’s decision to increase interest rates for a third time in as many months.
The yen also slipped, reflecting a decision by Japan’s central bank to hold rates steady in a bid to fight deflation and bolster the economy.
In midday trading, the euro edged 0.7% higher to US$1.5093 while the ICE Futures dollar index declined 0.7% to 74.346.
The U.S. dollar was up 0.4% at 86.64 yen.
On the commodities markets, gold rebounded and is expected to push through the US$1200 mark. The precious metal’s turn also boosted prices for silver, palladium and platinum.
Spot gold hit a peak of US$1200.70 an ounce and was bid at US$1198.70 an ounce at 1631 GMT.
Oil rebounded on the Chinese and U.S. manufacturing reports. U.S. crude for January delivery rose US$1.25 to US$78.53 a barrel by 11.33am EST (1633 GMT). Brent crude added US$1.03 to US$79.50.