European stocks higher after extended break
Europe’s main stock markets rallied Tuesday, while the euro retreated against the dollar, as investors reacted to U.S. economic data and debt moves by Greece in resumed trading after Easter.
The UK’s benchmark FTSE 100 index jumped 1.25 percent to 6,919.20 points compared with last Thursday’s close.
Frankfurt’s DAX 30 won 0.96 percent to 12,082 points and the CAC-40 in Paris gained 1.21 percent to 5,135.3 approaching midday.
“Given the strong finish in U.S. (stock) markets on Monday in reaction to the substandard U.S. unemployment report, it is unsurprising to see European markets play catchup,” said Jasper Lawler, analyst at trading group CMC Markets.
Wall Street provided a positive lead Monday as comments from a Federal Reserve official suggested any rate increases would likely be slow, while investors await the release of minutes from the bank’s latest meeting.
The U. S. Labor Department said Friday the economy added just 126,000 jobs in March, half of what was expected and the weakest growth since December 2013. While the data indicates a U.S. slowdown, investors were cheered as it means the Fed is unlikely to announce any rate rise until later in the year.
“The reaction in the U.S. dollar to what was a big slowdown in the U.S. employment growth in March has actually been fairly sanguine,” Lawler said.
Lawler said that if the U.S. dollar returns to a downward spiral, “equities in Europe may not fare as well without the boon of a weaker euro to help export markets.”
Focus during the latest shortened trading week was also on Greece, which Monday confirmed it will make a 460 million euro (US$505 million) debt payment to the International Monetary Fund as it seeks to allay concerns over the country’s solvency.
Athens is betting on this week’s Euro Working Group meetings to give it some relief from its creditors.
Eurozone deputy finance ministers will meet on Wednesday and Thursday in an attempt to reach an agreement on the Greek reforms needed to unlock the last tranche of its bailout package.
“Greece is in traders’ good books for once after the indebted nation stated it would make good on the repayment to the IMF due on Thursday,” said David Madden, market analyst at dealers IG.
Greece’s “commitment to repaying its loans has helped equity markets in Europe,” he added.
Asian Shares Rally on Return
Asian markets advanced Tuesday as most reopened after a long holiday weekend, in their first reaction to soft U.S. jobs data that has dampened expectations of an early U.S. interest rate rise.
Tokyo rose 1.25 percent as the yen eased against the dollar. The Nikkei added 242.56 points to 19,640.54.
Sydney added 0.46 percent, or 27.4 points, to 5,926.0, although it pared early gains after the Reserve Bank of Australia disappointed many investors by holding off on an interest rate cut.
Seoul was flat, edging up 0.60 points to 2,047.03, but Samsung ended lower despite predicting better than expected first-quarter profits.
Shanghai surged 2.52 percent, or 97.45 points, to 3,961.38 — its highest close since March 14, 2008.
Hong Kong was closed for a public holiday.
The Dow climbed 0.66 percent Monday, the S&P 500 also rose 0.66 percent and the Nasdaq put on 0.62 percent.
“Investors appeared to support a slower Fed rate lifting regime,” Michael McCarthy, chief market strategist in Sydney at CMC Markets, said according to Bloomberg News, before adding “but this enthusiasm could be short-lived as the ramifications of a lower re- covery sink in.”
Gold fetched US$ 1,212.72 against US$1,219.54 late Monday. In other markets: — Wellington added 0.41 percent, or 24.04 points, to 5,855.43.
— Manila gained 0.56 percent, or 44.94 points, to 8,098.68.
— Jakarta closed up 0.79 percent, or 43.26 points, to 5,523.29.
— Bangkok rose 0.88 percent, or 13.48 points, to 1,549.53
— Mumbai rose 0.04 percent, or 12.13 points, to end at 28,516.59.
— Kuala Lumpur gained 0.74 percent, or 13.57 points, to close at 1,856.51.
— Singapore rose 0.37 percent, or 12.71 points, to 3,465.62.