Global stocks rebound on hopes the Fed will delay liftoff
LONDON - Global stock markets clawed back some recent losses Thursday after weak U.S. economic figures stoked expectations that the Federal Reserve won't raise interest rates this year.
In Europe at 8:15 a.m. ET, Germany's DAX rose 1.6 percent to 10,081, while Britain's FTSE 100 advanced 1.1 percent to 6,339. The French CAC 40 was 1.3 percent higher at 4,668. U.S. stocks were poised for solid gains at the open, with Dow futures and the broader S&P 500 futures up 0.5 and 0.7 percent, respectively.
The Fed is back in focus as the main driver in financial markets. Though its rate-setting panel opted against raising interest rates in September following the summer's volatility in markets, most traders thought a December increase was likely. Those expectations have taken a bit of a battering, not least from a run of soft data.
As a result, many in the markets think the October policy meeting at the Fed may be more dovish than previously thought.
On Wednesday, U.S. government figures showed retail sales up a bare 0.1 percent in September from the previous month. More U.S. data is due Thursday, including weekly jobless claims and regional manufacturing surveys. If they're on the whole soft, traders may further ratchet up expectations that the Fed will continue with near-zero percent interest rates for a while longer. Those super-low rates have helped buoy stock markets over the past few years.
"Given the splits now starting to appear within the Federal Reserve's ranks at a very senior level, with respect to the timing of a rate rise this year, a continued deterioration in the data is likely to run the risk of making the hawks start to look a little foolish if they persist on sticking to their current narrative," said Michael Hewson, chief market analyst at CMC Markets.
U.S. traders have other things to contend with, too, as the latest quarterly corporate earnings reporting season gathers pace. In an after-hours statement Wednesday, Netflix reported that it is hooking fewer U.S. viewers than it hoped. That followed Walmart's cautious earnings guidance, which caused its stock to slump 10 percent, its worst one-day decline since January 1988.
In Asian trading on Thursday, Japan's Nikkei 225 rose 1.2 percent to 18,097, while Hong Kong's Hang Seng index jumped 2 percent to 22,888. The South Korean Kospi added 1.2 percent to 2,033, and Australia's S&P/ASX 200 gained 0.6 percent to 5,230. The Shanghai Composite Index was up 2.3 percent at 3,338. Shares in Southeast Asia also were higher.
The euro fell 0.3 percent to $1.1437, while the dollar fell 0.6 percent to 118.12 yen.
The price of benchmark U.S. crude slipped 50 cents to $46.14 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oil, lost 17 cents to $49.52 a barrel in London.