A roundup of trading on major world markets:
NEW YORK – The Dow and S&P 500 have rallied to their best close of 2016 as investors embraced the European Central Bank’s stimulus measures and steadying oil prices drove up energy shares.
Investors shook off scepticism over the ECB’s stimulus package disclosed on Thursday, which was overshadowed by signals of an end to rate cuts, said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
“It seemed to me this is yesterday’s rally delayed until today,” said Kuby. Investors “reassessed and realised it was good news”.
Friday’s bullish session was also strengthened by steadying oil prices, which have remained closely correlated with equities throughout 2016.
US crude was up almost two per cent and Brent was above $US40 per barrel after the International Energy Agency said oil prices may have bottomed as output in the United States and other non-OPEC countries was beginning to fall quickly.
The combined oil and natural gas US rig count fell to its lowest on records going back to 1940, according to data from Baker Hughes.
The Dow Jones industrial average rose 218.18 points, or 1.28 per cent, to 17,213.31, the S&P 500 gained 32.62 points, or 1.64 per cent, to 2,022.19 and the Nasdaq Composite added 86.31 points, or 1.85 per cent, to 4,748.47.
LONDON – Banking stocks lifted Britain’s FTSE 100, although they underperformed leading eurozone shares favoured by investors as the main beneficiaries of bold stimulus measure from the European Central Bank.
The blue-chip index rose 1.71 per cent to 6,139.79 points, recovering from Thursday’s two-week low, while Germany’s DAX rose 3.51 per cent to 332.98 points.
ECB chief Mario Draghi’s stimulus package sent markets into negative territory at first but investors were cheered by a plan for ultra cheap four-year TLTRO loans to banks.
“While markets had a tantrum after Draghi’s comment … we still see yesterday’s announcement as net positive with potential for more QE and the TLTRO refinancing proposition offsetting negative rates to some extent and having genuine potential to to boost Eurozone growth and inflation,” Accendo Markets analysts said in a note.
British banks were among the top sectoral risers, up two per cent with Barclays, Standard Chartered, Royal Bank of Scotland and Lloyds all rising between 2.6 per cent and 3.8 per cent.
“We turned positive on financials last week and they should get some relief from profitability concerns linked to negative interest rates, after Mr. Draghi indicated further rate cuts were less likely,” Credit Suisse analysts said, noting that the TLTROs should give the sector added support to outperform.
HONG KONG – Asian shares were higher, shrugging off global losses logged after the European Central Bank suggested it was running out of room to cut interest rates even if other stimulus options remained.
The message snuffed out a nascent rally in European shares overnight, leaving Asian share markets initially at a loss on how to react.
But by afternoon, most markets turned into positive territory.
Japan’s Nikkei erased earlier sharp losses and ended up 0.5 per cent, though still fell 0.4 per cent over the week.
The Hang Seng closed up 1.08 per cent, at 29,199.60 and Shanghai lifted 0.17 per cent to 3,018.28.
Chinese shares lagged the region, weighed down by the banking sector, as Beijing’s plan to allow debt-to-equity swaps by commercial lenders was viewed by some investors as being largely negative.
The Shanghai Composite Index was up 0.17 per cent.
China’s central bank underlined its commitment to a firm yuan by fixing the currency at the high for this year.
Markets went on a wild ride overnight after ECB chief Mario Draghi suggested there were limits to negative rate policy.
“From today’s perspective and taking into account the support of our measures to growth and inflation, we don’t anticipate that it will be necessary to reduce rates further,” proved to be the offending sentence.
WELLINGTON – The S&P/NZX 50 Index rose 7.1 points, or 0.1 per cent, to 6,515.42.
