On Friday, global markets rallied with the central bankers from Europe and China reiterating their support for struggling economies and markets abroad.
The S&P 500 and the Dow reached new record highs, poised for stock gains for the fifth straight week.
According to USA Today, the Dow Jones industrial Average rose 0.7% or 125 points hitting 17,894.83 as an intraday record high.
The Standard & Poor’s 500 Index added 0.7% and climbed to the all-time high of 2,071.46 while the Nasdaq Composite Index climbed 0.5%.
The global rally was ignited after China’s announcement of a surprise cut in interest rates and the European Central Bank chief, Mario Draghi saying that the ECB was ready to take more steps to stimulate the Euro zone’s weak economy. The ECB is determined to use aggressive measures, which include large scale purchase of assets to ensure that the Euro zone does not fall into another crisis.
Senior index analyst at S&P Dow Jones Indices, Howard Silverblatt said, “Stimulus is stimulating the market.”
Reuters quoted Wunderlich Securities chief market strategist, Art Hogan as having said, ‘To the extent that you have dueling positive monetary policy statements in two places that we were concerned about a slowdown in economic growth, that’s very good.”
European shares and other commodities sensitive to growth leapt on China’s move to cut the rates to 5.6% after a string of recent data that indicated the giant economy heading for the worst year in about 25 years.
The momentum of the US has been lagged by China and the Euro zone.
The DAX of Germany, the FTSE Eurofirst 300 and the CAC of France were higher between 2% and 3%.
China’s rate cut brought a positive mood in oil traders, with most of them expecting the Organization of the Petroleum Exporting Countries to reduce production in the November 27 meeting.
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