World stocks rise on hopes of continued US stimulus

AP and AFP

KUALA LUMPUR/HONG KONG–Global stock markets were mostly higher Monday amid growing expectations that the U.S. Federal Reserve won’t start reducing its monetary stimulus until at least the first quarter of next year. With uncertainty over the raising of the U.S. borrowing limit temporarily resolved, investors have focused on other matters, notably when the Federal Reserve will reduce its mammoth monetary stimulus that has been a boon for stock markets. U.S. hiring and durable goods orders for September were weaker than expected, signaling that growth momentum may be slowing and reinforcing expectations that a scaling back of stimulus known as “tapering” won’t begin until next year, Mitul Kotecha of Credit Agricole CIB in Hong Kong said in a market commentary.

Further U.S. data releases this week including September industrial production, retail sales, inflation and consumer confidence as well as a Fed policy meeting could reaffirm that expectation, he said. The Fed is buying US$85 billion of U.S. government bonds and other securities with the aim of keeping interest rates low to support economic recovery. “The bad news is good philosophy of markets means that data is helping to aid expectations that Fed tapering may be delayed,” he said. “We continue to anticipate tapering to begin in January although admittedly the market is shifting expectations to even later.”

In early European trading, the FTSE 100 index of leading British shares was up 0.2 percent at 6,732.59 while Germany’s DAX rose 0.3 percent to 9,008.31. The CAC-40 in France, however, was off 0.1 percent at 4,267.81.

Futures pointed to modest gains on Wall Street with Dow futures up 0.2 percent at 15,531 and S&P 500 futures higher by 0.2 percent to 1,757.70.

Wall St. Rally Lifts Asia Stocks Asian markets rose on Monday following a record close on Wall Street, and as investors picked up bargains after broad losses last week. The dollar advanced against the yen but the gains were capped by expectations the U.S. Federal Reserve will keep its monetary easing policy in place well into the new year. Tokyo jumped 2.19 percent, or 307.85 points, to 14,396.04 thanks to the pick-up in the dollar. Sydney was up 1.02 percent, or 55.1 points, at 5,441.4, while Seoul closed 0.68 percent higher, adding 13.75 points to 2,048.14. Shanghai ended flat, edging up 0.91 points to 2,133.87 while Hong Kong added 0.48 percent, or 108.24 points, to end at 22,806.58 The gains follow a lackluster performance in the region last week following worse than expected jobs figures out of the United States that indicate the economy is not as strong as first thought. Traders Monday took their cue from Wall Street, whose three main indexes posted healthy gains on Friday thanks to upbeat corporate results. Amazon and Microsoft announced better than expected earnings for the July-September quarter, while there were also solid results from Procter & Gamble and UPS. The Dow rose 0.39 percent, while the broad-based S&P 500 climbed 0.44 percent to a new record Friday. The Nasdaq tacked on 0.37 percent. U.S. shares, like most global stocks, have been given some support from traders betting the Fed will delay winding down its US$85 billion-a-month bond-buying stimulus for some time. Gold rose to US$1,350.24 at 1100 GMT compared with US$1,340.35 on Friday.