Wednesday 29 November 2023

US, European equities mostly edged higher.

Wild week for markets ends quietly

NEW YORK, August 29, 2015

A volatile ride for global markets this week ended calmly on Friday even as worries over Chinese economic growth and the Federal Reserve's plans to raise interest rates weighed on stocks, but oil rebounded sharply for a second day.

US crude jumped more than 6 per cent as a rally in gasoline prices and air raids in Yemen forced traders to scramble to cover short positions. US crude gained 17.2 per cent in two sessions, the second-largest two-day rise in 25 years.

Those Fed officials who are anxious to raise rates said at an annual global central bankers' conference in Jackson Hole, Wyoming that continued market turmoil may lead the US central bank to delay tightening monetary policy beyond September.

The Fed is waiting to see how data and markets unfold over the coming weeks before deciding whether to raise rates at its meeting in mid-September, Vice Chair Stanley Fischer told CNBC.

Chinese stocks jumped for a second straight day, rising more than 4.0 per cent, after authorities said pension funds managed by local governments will soon start investing 2 trillion yuan ($313.05 billion) in stocks and other assets.

The move was the latest response by Chinese authorities, including the People's Bank of China, to shore up the economy after they cut rates, lowered reserve requirements and injected liquidity into the banking system.

Stocks on Wall Street mostly edged higher at the close, as European equity markets did hours earlier, suggesting fears of Chinese contagion were overdone and that a US rate hike is not the end of the world, said Andrew Wilkinson, chief market strategist at Interactive Brokers LLC in Greenwich, Connecticut.

"There's an element of throwing the baby out with the bath water. Everything got thrown out on that view," Wilkinson said.

"It's really a question of volatility having settled down somewhat even though it remains relatively high and people still view equities as being a decent place to be," he said.

The Dow Jones industrial average closed down 11.76 points, or 0.07 per cent, to 16,643.01. The S&P 500 rose 1.21 points, or 0.06 per cent, to 1,988.87 and the Nasdaq Composite added 15.62 points, or 0.32 per cent, to 4,828.33.

Major European equity indices finished higher after a late-session rally, helping MSCI's all-country stock index gain 0.19 per cent. The pan-European FTSEurofirst 300 index rose 0.34 per cent to close at 1,435.13, and euro zone's blue-chip Euro STOXX 50 index gained 0.18 per cent. But Germany's DAX shed 0.17 per cent, or a decline of just under 17 per cent from its record high in April.

Gold rose as technical indicators and the notion the Fed may delay a rate hike provided support. US gold for December delivery rose 1 per cent to settle at $1,134 an ounce.

US Treasuries prices retreated from a one-week peak. Benchmark 10-year Treasuries notes fell 5/32 in price to yield 2.1860 per cent.

German bond yields edged lower, defying the sudden surge in oil, as data showed consumer prices in Europe's biggest economy had been weighed down by falling energy costs.

Oil saw its biggest one-day bounce since 2009 on Thursday, with North Sea Brent and US light crude rising more than 10 per cent. US crude notched its first weekly gain in nine weeks, ending its longest losing streak since 1986.

Brent climbed $2.49 to settle at $50.05 a barrel on Friday and US crude rose $2.66 to settle at $45.22 a barrel.

The US dollar gained for a fourth straight session, buoyed by calmer financial markets and generally positive US economic data that supported the notion that the world's largest economy was on a stable growth path.

The dollar index was up 0.5 per cent at 96.088. The euro slipped 0.5 per cent to $1.1187. Against the yen , the dollar rose 0.29 per cent to 121.38. – Reuters

Tags: China | stocks | Shanghai | global markets | Federal interest |

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