A roundup of trading on major world markets:
NEW YORK – US stocks have rebounded after the Federal Reserve’s policymakers kept ultra-low interest rates and said they were prepared to do more if needed to stimulate the sluggish economy.
The Dow Jones Industrial Average gained 178.08 points (1.53 per cent) on Wednesday to finish at 11,836.04, ending a two-day sell-off.
The tech-heavy Nasdaq Composite added 33.02 points (1.27 per cent) to 2,639.98, while the S&P 500-stock index, a broader measure of the markets, advanced 19.62 points (1.61 per cent) to 1,237.90.
Concluding a two-day meeting, the Federal Open Market Committee left monetary policy unchanged, saying economic growth had “strengthened somewhat” in the third quarter.
The Fed “is prepared to employ its tools to promote a stronger economic recovery in a context of price stability,” the FOMC said in a statement.
Sentiment also was aided by better-than-expected private-sector job creation last month reported by payrolls firm ADP ahead of Friday’s government October labour report.
Wall Street kept an eye on developments in Europe, where a planned Greek referendum on the country’s latest European Union rescue has sparked fears the country will default on its debt, and possibly leave the eurozone.
The bond market slipped.
The yield on the 10-year Treasury rose to 2.01 per cent from 2.00 late on Tuesday, while that on the 30-year Treasury climbed to 3.04 per cent from 3.00 per cent.
Bond yields and prices move in opposite directions.
LONDON – European stock markets have closed higher after massive losses the previous day as investors waited for key meetings between EU and Greek leaders on Athens’ shock plan to put its latest debt rescue to a referendum.
In London, the FTSE-100 index of top companies closed up 1.15 per cent at 5,484.10 points.
In Paris the CAC-40 gained 1.38 per cent to 3,110.59 points and in Frankfurt the DAX 30 rose 2.25 per cent to 5,965.63 points.
Other European markets made similar gains, with Milan up 2.31 per cent but Madrid finished marginally lower, down 0.06 per cent.
In foreign exchange deals on Wednesday, the euro rose to $US1.3743 from $US1.3697 in New York late on Tuesday. The dollar fell to 78.09 yen, from 78.34.
On Tuesday, the European single currency had tumbled to $US1.3609 – the lowest since October 12 and well below the $US1.42-level reached last week when markets had welcomed the eurozone debt rescue plan unveiled in Brussels.
In Italy, 10-year government bonds were still trading above 6.0 per cent – a level seen by analysts as a threshold that could imperil the nation’s chances of financing itself.
The rate had reached a near-record high of 6.33 per cent on Tuesday, but stood at 6.145 per cent on Wednesday.
HONG KONG – Asian markets were mixed, with fears a Greek referendum on its bailout deal could derail Europe’s plan to fix its debt crisis, while Chinese shares rose on hopes for looser monetary policy.
Tokyo skidded 2.21 per cent, or 195.10 points, to 8,640.42, Sydney ended 1.14 per cent, or 48.3 points, lower at 4,184.6 and Seoul lost 0.61 per cent, or 11.62 points, to 1,898.01.
However, Hong Kong closed 1.88 per cent, or 363.75 points, higher at 19,733.71 and Shanghai gained 1.38 per cent, or 34.09 points, to 2,504.11.
In Asian trade on Wednesday, Italy’s benchmark 10-year bonds were yielding 6.08 per cent.
Japan’s finance minister said on Wednesday that the referendum move had “confused people”, ahead of a Group of 20 meeting in France on Thursday where the issue was expected to top the agenda.
Taiwan’s central bank governor Perng Fai-nan was more blunt, saying the move was like “throwing a bomb to financial markets,” Dow Jones Newswires reported.
Investors were also jittery after Beijing said Tuesday that China’s official purchasing managers’ index dropped to 50.4 in October from 51.2 in September, suggesting the global economy’s main growth driver was losing steam.
Anything above 50 is seen as growth while a reading below indicates contraction.
However, Shanghai and Hong Kong staged an afternoon recovery on hopes Beijing will reverse a monetary tightening policy it has been following for more than a year in a bid to tame stubbornly high inflation.
China’s leaders have since October last year raised interest rates five times and increased the amount of cash banks must keep in reserve, effectively restricting their lending capacity.
WELLINGTON – Wellington closed 0.72 per cent, or 23.88 points, lower at 3,308.89.
