Global stock markets mostly higher after Wall Street surge

AP – Most major stock markets and United States (US) futures rose yesterday after Wall Street surged to its biggest daily gain since July despite uncertainty about the global outlook.

London, Frankfurt and Tokyo advanced while Shanghai declined.

Investors have been encouraged by central bank infusions of credit into struggling economies and hopes for a vaccine to end the coronavirus pandemic that has plunged the world into its deepest slump since the 1930s. Forecasters warn the stock market recovery might be running too far ahead of economic activity as the United States and some other countries reimpose anti-virus controls that hamper business.

“The irony of market exuberance is rich,” said Mizuho Bank in a report. “Record highs on Wall Street make a mockery of policymakers grasping for recourse to the worst downturn in decades.”

In early trading, the FTSE 100 in London gained 0.7 per cent to 5,981.93 and the DAX in Frankfurt added 1.4 per cent to 13,428.33. The CAC 40 in France added 1.6 per cent to 5,112.38.

A currency trader walks near the screens showing the Korea Composite Stock Price Index (L) and the foreign exchange rate between US dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea yesterday. PHOTO: AP

On Wall Street, the future for the benchmark S&P 500 index was up less than 0.1 per cent while that for the Dow Jones Industrial Average gained 0.2 per cent.

Yesterday, the S&P 500 rose 1.5 per cent. The index is up 10.8 per cent this year following a five-month streak of gains. The Dow Jones Industrial Average gained 1.6 per cent.

The Nasdaq composite added one per cent to 12,056.44. The tech-heavy Nasdaq is up 34.4 per cent, driven by gains for Apple and other technology giants that investors believe are safe bets as the public spends more time on Internet-connected devices.

In Asia, the Shanghai Composite Index opened higher but retreated to close down 0.6 per cent at 3,384.98. The Nikke 225 in Tokyo gained 0.9 per cent to 23,465.53. The Hang Seng in Hong Kong lost 0.5 per cent to 25,001.30.

The Kospi in Seoul advanced 1.3 per cent to 2,395.90 and Sydney’s S&P-ASX 200 was up 0.8 per cent at 6,112.60. India’s Sensex was unchanged at 39,092.05. New Zealand and Bangkok gained while Singapore and Jakarta retreated.

US stocks have gained despite lack of agreement in Congress on a new economic aid package with additional unemployment benefits to support consumer spending.

A report by payroll processor ADP, widely watched as a forerunner of government employment data due out today, showed the private sector added 428,000 jobs in August, less than half the one million expected by forecasters.

Analysts said that could be a warning sign the job market is cooling after some US states reimposed anti-virus controls and the expiration of supplemental unemployment benefits cut into consumer spending.

“Bullish stock market sentiment seems to be nearing a tentative peak as the labour market recovery stalls,” said Edward Moya of Oanda in a report.

Also on Wednesday, the US Federal Reserve said its August survey of businesses found enduring uncertainty over the pandemic and the harm it causes to consumer and business activity. Healthcare and communications stocks also helped to drive Wednesday’s rally.

Benchmark US crude oil for October delivery lost 36 cents to USD41.15 per barrel in electronic trading on the New York Mercantile Exchange.

The contract slid USD1.25 on Wednesday. Brent crude, the basis for pricing international oils, declined 48 cents to USD43.95 per barrel in London. It dropped USD1.15 the previous session to USD44.43 a barrel.

The dollar rose to JPY106.24 from JPY106.16 on Wednesday. The euro declined to USD1.1816 from USD1.1855.