US economic data kicked into gear Thursday, driving world stock markets sharply higher as investors shook off jitters over China’s stalling economy.
All three major US indices closed up more than 2 percent, putting them higher for the week, after rebounds in China and Europe.
Reuters is reporting that increased appetite for risk sent government bonds and the Japanese yen down Wednesday while the dollar spiked.
Annual US gross domestic product growth was revised to 3.7 percent from the 2.3 percent rate reported last month and last week’s jobless claims fell more than expected.
“Can the US economy prove the naysayers wrong? Well, so far it has been able to do that and today’s data really puts a line under that,” said Peter Kenny, chief market strategist at Clearpool Group in New York.
The data came after New York Fed President William Dudley had said Wednesday that arguments for a September rate increase “seem less compelling” than only weeks ago, given the threat posed to the US economy by recent market turmoil.
On top of these factors investor nerves in China and Europe were helped overnight by Wall Street’s Wednesday rally, as well as strong lending data from Europe, according to John Canally, Chief Economic Strategist for LPL Financial.
Markets around the world plunged earlier in the week as a slump in Shanghai shares fueled worries over China’s economic health.
While Beijing moved to ease policy late on Tuesday, stocks still ended weak that day, but Wall Street staged a strong comeback late Wednesday and its biggest daily gain in four years helped to calm investor nerves overseas.
The Dow Jones industrial average rose 369.26 points, or 2.27 percent, to 16,654.77, the S&P 500 gained 47.15 points, or 2.43 percent, to 1,987.66 and the Nasdaq Composite added 115.17 points, or 2.45 percent, to 4,812.71.
In Europe, the FTSEuroFirst index of leading European companies closed up 3.6 percent. Germany’s DAX, France’s CAC 40 and Britain’s FTSE 100 all climbed more than 3 percent.
The two main Chinese indices surged 5.3 percent and 5.9 percent on Thursday, snapping a five-day losing streak that had sent tremors around global financial markets.
Emerging markets stocks rebounded with MSCI’s benchmark emerging market stocks index up 3.3 percent.
The dollar advanced for a third consecutive session, bolstered by gains in global equities as well as the US data. The dollar index, which measures the greenback against a basket of major currencies, was up 0.7 percent Thursday afternoon.
Crude oil rocketed in its biggest one-day rally since 2009 as recovering equity markets and news of diminished crude supplies set off a short-covering surge by bearish traders.
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