Markets Gain on Expectations of Fed Inaction

Global stock markets rose Monday as investors considered the prospect of U.S. interest rates remaining at rock-bottom for longer and saw increased prospects for Chinese stimulus.

The Stoxx Europe 600 was 1.7% higher in early trade following a weaker than expected U.S. jobs report Friday. Stocks initially sold off on Friday over concerns that a volatile global economy was hurting the outlook for U.S. growth, before a rally in oil prices boosted the shares of energy and materials companies and caused U.S. equity markets to close higher.

Labor-market strength had earlier been cited as an important factor motivating U.S. central bank officials to consider raising interest rates. Federal Reserve Bank of Boston President Eric Rosengren said Saturday in an interview with The Wall Street Journal that his confidence in a rate rise fell after the latest jobs data.

Ultralow interest rates have supported global stock markets for the past several years. Some analysts said Monday a delayed U.S. rate rise should further boost global stocks.

"The weekend has given traders the time to digest the weaker-than-expected jobs report on Friday and it seems we are back with 'bad news is good news' for the equity markets," said Jonathan Sudaria, night dealer at London Capital Group.

Markets in Asia were higher Monday as expectations also grew for more stimulus from Beijing following weak economic data. The World Bank downgraded its economic growth forecasts for the East Asia and Pacific region and China's expected growth rate was cut to 6.9% from 7.1%.

Hong Kong's Hang Seng Index was up 1.8%.

In Japan, the Nikkei 225 Stock Average was 1.6% higher. Stock markets in mainland China remained closed for a holiday.

In currencies, the euro was slightly higher against the dollar at $1.1237.

Investors in Europe were also considering the results of Portugal's elections, where Prime Minister Pedro Passos Coelho, who oversaw years of unpopular austerity measures, finished far ahead of his Socialist rival, but his center-right coalition lost its majority in Parliament. Mr. Passos Coelho said he would seek an accord with the Socialists to allow him to form a minority government and pass legislation needed to sustain Portugal's recovery.

In commodities, Brent crude oil futures were last at $49.17 a barrel. In a surprise move Sunday, Saudi Arabia cut the prices it charges for oil following cuts by Iran, Iraq and other Middle East countries last month.

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(END) Dow Jones Newswires

October 05, 2015 04:55 ET (08:55 GMT)

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