Global Stocks Rally
January 19 2016 - 5:40AM
Dow Jones News
Global stocks rallied Tuesday even though China recorded the
weakest annual pace of growth in a quarter century, as gains in
crude oil and base metals prices lifted downtrodden energy and
mining shares.
China's 6.9% annual growth rate seemed to offer relief to
investors, some of whom had feared worse, and many expect Beijing
may do more to stimulate its economy.
The Stoxx Europe 600 rose 1.4% in early trade Tuesday after
Asian shares closed higher.
Futures pointed to a 1.4% opening gain for the S&P 500 as it
reopens from a holiday. Changes in futures don't necessarily
reflect market moves after the opening bell.
Fears of a slowdown in China and its impact on commodity prices
have rattled stock markets around the world from the first trading
session of the year. Both European stocks and the S&P 500 are
down 8% in 2016.
Still, some investors are less pessimistic on the outlook for
China, noting that Beijing has room to maneuver if it wants to
boost its slowing economy.
"China still has a dashboard of policy buttons it can press,"
said Neil Williams, group chief economist at Hermes Investment
Management, noting China can continue to devalue its currency,
undertake quantitative easing, or "go on a fiscal splurge" if
needed.
The volatile Shanghai Composite Index was up 3.2% Tuesday,
bringing losses for the year down to 15%.
Adding to the positive sentiment across markets, Brent crude oil
was last up 2.6% at $29.28, as bargain-hunting overshadowed the
sting of slowing Chinese growth. Base metals also gained, with
copper up 1.8%.
The day's reprieve in battered commodity prices sent Europe's
basic resources sector up 4.1%, as the oil and gas sector climbed
2%. Shares in mining Glencore PLC were up 7.7%, as Anglo American
PLC gained 7.9% and steelmaker ArcelorMittal SA rose 5.3%.
In currencies, the euro was down 0.1% against the dollar at
$1.0878 ahead of inflation data for the eurozone as a whole due
later in the European morning.
Data early Tuesday showed German inflation was unchanged in
December from the previous month, well below the European Central
Bank's medium-term inflation target of just around 2%.
Subdued inflation across the eurozone caused the ECB in December
to cut its deposit rate--at which commercial banks park excess
money with the central bank--deeper into negative territory, while
it also extended the duration of its asset purchase program to
March 2017.
The ECB holds a governing council meeting on Thursday, and while
analysts don't expect immediate action, many expect the bank to
roll out additional stimulus measures later this year.
Elsewhere in Asian trade, Japan's Nikkei Stock Average was up
0.6% as the dollar gained 0.4% against the yen to ¥ 117.8790.
Australia's S&P ASX 200 added 0.9%.
Gold was up 0.3% at $1093.90 a troy ounce.
Later Tuesday, the U.S. earnings season continues with reports
from Bank of America Corp., Morgan Stanley, International Business
Machines Corp. and Netflix Inc.
Emese Bartha contributed to this article
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
January 19, 2016 05:25 ET (10:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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