Global markets rise on hopes for US rate cut

BEIJING (AP) — World shares were mixed yesterday after Wall Street rebounded on investor hopes for a United States (US) interest rate cut.

London and Frankfurt opened higher and Tokyo rose while Hong Kong declined. Chinese markets were closed for a holiday.

US stocks pulled out of a two-day skid sparked by unexpectedly weak manufacturing and hiring data. Markets were hit again on Thursday by a survey showing weaker-than-forecast growth in US service industries, but investor hopes were buoyed by growing expectations the US Federal Reserve will cut rates again to shore up economic activity.

“Increased hopes for further interest rate cuts by the Fed look to help stabilise markets,” said Jingyi Pan of IG in a report.

In early trading, London’s FTSE 100 gained 0.4 per cent to 7,107.35 and Germany’s DAX added 0.2 per cent to 11,944.11. France’s CAC 40 rose 0.3 per cent to 5,454.72.

On Wall Street, futures for the benchmark Standard & Poor’s 500 index fell 0.3 per cent and that for the Dow Jones Industrial Average declined 0.2 per cent.

In Asia, Tokyo’s Nikkei 225 added 0.3 per cent to 21,410.20 while Hong Kong’s Hang Seng tumbled 1.1 per cent to 25,821.03.

Seoul’s Kospi fell 0.5 per cent to 2,020.69 and Sydney’s S&P-ASX 200 added 0.4 per cent to 6,521.10.

Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP

India’s Sensex retreated 0.9 per cent to 37,766.22 after the central bank cut its benchmark interest rate by a quarter percentage point to 5.15 per cent, citing slowing growth. New Zealand gained while Singapore declined.

On Wall Street, shares were boosted on Thursday by strength in technology industries. The S&P rose 0.8 per cent while the Dow gained 0.5 per cent.

The Nasdaq, dominated by tech stocks, climbed 1.1 per cent.

Investors are wrestling with uncertainty about the economy and the impact of a US-Chinese tariff war.

Adding to their unease, the Institute for Supply Management, an association of purchasing managers, said its non-manufacturing index sank to 52.6 from 56.4 in August. Readings above 50 signal growth, but September’s figures are the lowest since August 2016.

Services account for more than two-thirds of the US economy and have been resilient in the face of the tariff war that is squeezing manufacturers.

The Fed has lowered rates by a quarter-percentage point twice this year in a bid to shield the economy from slowing growth abroad and the effects of the trade war. Investors put the odds the Fed will cut rates again at the end of this month at above 88 per cent, according to the CME Group.

The federal government released its own snapshot of the job market yesterday. The Labour Department is expected to report employers added 145,000 jobs last month, up from 130,00 in August, according to analysts polled by FactSet.

ENERGY

Benchmark US crude gained 38 cents to USD52.82 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 19 cents on Thursday to close at USD52.45.

Brent crude, used to price international oils, advanced 45 cents to USD58.16 per barrel in London. It gained two cents the previous session to USD57.71.

CURRENCY

The dollar declined to JPY106.78 from Thursday’s JPY106.91. The euro gained to USD1.0979 from USD1.0965.