Risk-taking was evident in yesterday’s trading sessions, allowing US equity indices to close more than 2% higher. The Dow 30 index was up 348.58 points to 16,865.08 (+2.11%), the S&P 500 index closed 46.12 points up to 1,978.35 (+2.39%), and the Nasdaq closed 131.6 points up to 4,689.6 (+2.89%). The S&P 500 VIX, which is considered a gauge of market fear, fell 2.85 points to 17.70 (-13.87%).
Data from the US economy beat expectations, as the ISM manufacturing PMI rose from 48.2 to 49.5, surpassing estimates of a rise to 48.5. Most of the components of the survey also indicated strong improvements, including the employment sub-index.
Meanwhile, oil prices saw another bounce when Russia’s oil minister confirmed that a deal to cap oil production might be enough to stabilize markets. He added that oil companies in the country are in discussions with the government to refrain from hiking taxes in exchange for freezing output. WTI crude oil landed above $34/barrel while Brent crude oil rose to $36.73/barrel.
Crude oil inventories data is still due today and a rise of 2.5 million barrels is eyed, slower than the previous gain of 3.5 million barrels and possibly enough to ease fears of a stockpile buildup.
The German DAX closed 221.76 points up to 9,717.16 (+2.34%), the French CAC 40 was up 53.29 points to 4,406.84 (+1.22%), and the Euro Stoxx 50 rose 49.71 points to 2,995.46 (+1.69%). Data from the region came in mostly in line with expectations, with the jobless rate improving from 10.4% to 10.3%.
Asian markets advance on RBA statement, China RRR cut
Asian markets also enjoyed risk rallies following the Chinese central bank’s decision to cut the reserve ratio requirement, improving lending conditions in the country and boosting global growth prospects. Data from China actually came in weaker than expected, with manufacturing and non-manufacturing PMI showing declines in activity.
Still, the RBA decided to keep interest rates on hold at 2.00% for the time being while maintaining a relatively upbeat outlook for the economy. The Australian GDP rose 0.6% for Q4 2015, higher than the projected 0.5% climb and outpacing analysts’ expectations of subpar growth.
The China A50 index is up 160.11 points to 9,032.54 (+1.80%), the S&P ASX 200 index is up 110.45 points to 5,033.30 (+2.24%), and the Nikkei 225 is up 706.08 points to 16,791.37 (+4.39%).