Stock Exchanges: S&P 500 Ups as Rate-Cuts Close In
Stocks stepped on higher territories at the close of Wednesday trades as weak United States economic data strengthened Fed rate-cuts expectations.
Investors wager on the likeliness that the Federal Reserve will, later this month, finally cut its rates as anticipated.
Data from ADP and Moody’s analytics show that U.S. private payrolls increased by 102,000 in June, failing to hit the 135,000 analysts’ expectations.
The weaker-than-expected data reinforces the probability of the Fed lowering rates by the end of the month. Previously, the central bank made the decision to welcome any monetary policy that lies on an easier stance.
It will “act as appropriate” to preserve the rally of the current economic expansion, according to the central bank.
Investors now have the release of the U.S. non-farm payrolls’ data on Friday locked on sight. The market is holding on to expectations of the data to have risen by 160,000 in June.
Over the U.S. stock exchanges, the S&P 500 inched 0.7% higher to 2,995.82 as real estate, consumer, and tech sectors bolstered the index to record levels. The index also closed just 0.1% less than the 3000 levels.
Scott Redler, an analyst, said, “The first time we get there you’ll probably see some profit-taking. If technology continues to be strong and the semiconductors get some kind of bounce, that could probably push the S&P 500 through its 3,000 level. It’s good to see the FANG names show some power.”
Shares of FANG components (Facebook, Apple, Netflix, and Google) all rose on Wednesday.
The Dow Jones Industrial Average earned 179.32 points achieving 26,966 at the end of the day.
The Nasdaq Composite increased by 0.7% to 8,170.23.
Similarly, shares in the Asian stock exchanges were higher on Thursday sessions.
Asian Shares Rally on Thursday
Japan’s Nikkei was up by 0.3%, while the largest MSCI index of Asian-Pacific shares outside Japan gained 0.4%.
Noriko Miyoshi, head of fixed income at Tokyo-based firm Simplex Asset Management, said, “Stocks and bonds rallied together as the markets were betting on interest rate cuts at the European Central Bank and the U.S. Federal Reserve.”
“The pace looks too fast. Investors across the world rushed to take part in the game of yield hunting,” she added.
Shares in Mainland China, however, turned towards a negative direction amidst Sino-U.S. trade ambiguity. Both the Shanghai Composite and the blue-chip CSI 300 were down by 0.2% and 0.3%, respectively. The Hang Seng index over at Hong Kong inched 0.1% upwards.
U.S. President Donald Trump commented over a so-called “currency manipulation.”
On Wednesday, Trump said in part of a tweet, “China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA.”
U.S. and Chinese representatives will meet in the following weeks to pick up on where they left the discussions on the trade dispute, according to White House economic adviser Larry Kudlow.
The U.S. Commerce Department also said on Wednesday that reviews of licensing requests by U.S.-based firms to conduct business with Chinese Telecom Huawei are ongoing.
Elsewhere in the stock exchanges, the Australian Securities Exchange index was up 1.61% following the news that the RBA reduced interest rates to the historical low of 1% a few days ago.
European stocks are also treading for a higher market open as futures for Britain’s FTSE and Germany’s DAX both inched 0.1% higher after Christine Lagarde was nominated for ECB Presidency.
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