Investors were pleased when Lael Brainard, a member of the Federal Reserve board, said the Fed shouldn’t raise interest rates quickly because that could hurt the economy.
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European stocks are likely to open higher on Tuesday, as dovish comments from Fed officials eased concerns over a September hike and a slew of Chinese data beat expectations after a weak performance the previous month. BSE IT and Tech indices managed to keep their heads up, logging gains of 0.87 per cent and 0.26 per cent, respectively, fuelled by Infosys, TCS and Wipro, which were three of the only four stocks on the BSE to rise.
USA stock prices rose following Brainard’s comments while the dollar weakened and yields on US government debt fell.
Australia’s SPI futures were up 1.5 percent, after the ASX 200 last closed down 2.24 percent at 5,219.6.
ASIA’S DAY: Japan’s Nikkei 225 gained 0.3 percent to 16,729.04 and South Korea’s Kospi rose 0.4 percent to 1,999.36 as Samsung Electronics, in the midst of a recall of its Galaxy Note 7 smartphones, gained 4.2 percent, recovering about 60 percent of Monday’s 7 percent loss.
Analysts said dovish remarks made by these two influential Fed officials would make it harder for the central bank to raise rates as soon as in the next policy meeting on September 20-21.
Had she signaled a change of heart, it might have convinced investors that a hike was coming next week, especially after another perceived dove, Eric Rosengren of the Federal Reserve Bank of Boston, signaled a willingness to raise rates as soon as this month.
KEEPING SCORE: The Dow Jones industrial average rose 65 points, or 0.4 percent, to 18,150 as of 12:25 p.m.
OIL: U.S. crude rose 24 cents to $46.15 a barrel in NY.
The lower futures indicate traders are expecting a pullback from Monday’s vigorous results. The biggest gains went to safe investments that pay big dividends, as they are more enticing to investors when interest rates and bond yields are low.
On the economic data front, China released better-than-expected August data, with fixed-asset investment growth holding steady at 8.1 percent on-year, August industrial output rising 6.3 percent on-year and retail sales increasing by 10.6 percent on-year.
“Hillary Clinton’s September 11th medical episode and revelations of a recent pneumonia diagnosis may have pushed markets to begin taking a closer look at presidential candidate Donald Trump, whom markets appear to see as less predictable”, said Andrew Meredith, co-managing director at Tyton Capital Advisors in Tokyo. Brent crude, the benchmark for worldwide oil trading, lost 56 cents to $47.76 a barrel in London.
Toward 2100 GMT, the euro was at $1.1234, up from $1.1232 at the same time on Friday.
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Futures on the S&P 500 fell 0.3%, after a 1.5% jump in the USA benchmark. The dollar bought 101.85 yen, down from 102.69, and the pound stood at $1.3336, up from $1.3268. The contract added 41 cents on Monday.
