Stocks rise on expectations Fed won''t hike rates this year

Date

10/5/2015 11:33:34 PM

(MENAFN- Khaleej Times)

London: World stocks rose Monday after weak US jobs data prompted expectations the Federal Reserve might postpone an interest rate hike.

In midday trading in Europe France's CAC-40 index was up 3.2 per cent to 4599.34 and Germany's DAX advanced 2.1 per cent to 9749.10. Britain's FTSE 100 added 2.1 per cent to 6253.74. Wall Street looked set for gains. Futures for the Dow Jones industrial average and the S&P 500 were each up 0.5 per cent.

The Labour Department reported employers added 142000 workers last month less than the 200000 anticipated on Wall Street and hired fewer people in July and August than previously thought.

The unemployment rate stayed at 5.1 per cent but only because many Americans have stopped looking for work and are no longer counted as unemployed. The news was taken as a positive by investors who want the Fed to postpone a rate rise expected as early as October. Ultra-low interest rates in place since the 2008 global crisis have helped push up stock prices.

"The absolutely weak nonfarm payrolls data complicated the Fed's resolve to raise rates this year. Markets reacted to the soft reading by buying both stocks and bonds" said IG analyst Bernard Aw in a report.

"The soft jobs numbers in the last two months certainly make October rate lift-off an even more unlikely endeavor for a data-dependent Fed. The labour market conditions which have been solid for much of this year seem a tad less solid now. The question is now whether the Fed thinks that these developments are indicative of a softening of the jobs market or just a temporary blip in the otherwise strong recent trend."

Hong Kong's Hang Seng rose 1.8 per cent to 21854.50 and Tokyo's Nikkei 225 gained 1.6 per cent to 18005.49.

Australia's S&P/ASX 200 rose 2 per cent to 5150.50 and India's Sensex advanced 1.7 per cent to 26680.83. South Korea's Kospi added 0.4 per cent to 1978.25. Taiwan Singapore Manila and Jakarta also rose. Markets in mainland China are closed for holidays until Thursday.

Shares in Glencore a global commodities mining and trading group were hugely volatile. The company last week saw its shares drop about 30 per cent on speculation it would struggle with high debts and low commodity selling prices. The shares bounced back last week and on Monday were volatile once again. They were up as much as 20 per cent from Friday's closing price before stabilising with an 11 per cent gain at 1.05 in London. The company issued a statement saying it was not aware of any reasons for Monday's share movement.

Benchmark US crude gained 54 cents to $46.08 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 80 cents on Friday to close at $45.54. The dollar rose to 120.23 yen from Friday's 119.96 yen. The euro edged up to $1.1227 from $1.1210.

India's benchmark stock index rallied to a six-week high tracking gains in Asian equities amid speculation disappointing US payrolls data will push the Federal Reserve's interest-rate increases to next year. The Sensex jumped 2.2 per cent to 26785.55 the biggest advance since January 15 and the highest close since August 21. Eleven of the 30 stocks on the gauge increased more than 3 per cent each.

The MSCI Asia Pacific Index jumped 1.4 per cent tracking Friday's surge in the US after payrolls climbed less than projected in September leading traders to shift bets on the first rate increase since 2006 to March next year.

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