Traders cheered Jeremy Hunt's decision to tear up his predecessor's debt-fuelled mini-budget, which sent shivers through markets last month
New York (AFP) - Major global equities rose Tuesday, with sentiment boosted by upbeat US earnings and relief over the demise of the new British government’s controversial fiscal plan.
Analysts pointed to better-than-expected reports from Goldman Sachs and Johnson & Johnson as a positive driver for stocks, along with shifting investor sentiment.
On Wall Street, both the Dow and S&P 500 climbed more than one percent following a day of strong trading in Asia and Europe.
“Better-than-expected US earnings reports sparked a rally on Wall Street with positive momentum reverberating across European equities,” Interactive Investor analyst Victoria Scholar told AFP.
US industrial production also picked up more than anticipated in September, according to official data Tuesday, bouncing back after a dip in August.
But Craig Erlam, senior market analyst at OANDA, warned the upbeat investor sentiment might not last, saying there was a “strong feeling of a bear market rally about trading over the course of the last week.”
“From the post-US-inflation rebound to what has now been a strong start to the week – in part driven by the UK’s decision to no longer shoot itself in the foot – nothing about this screams sustainable.”
Companies in the S&P 500 are expected to see earnings growth of just 1.6 percent, the lowest rate in two years, according to Factset.
- UK turbulence -
Frankfurt stocks closed up one percent on Tuesday as a key survey showed German investor confidence climbed slightly in October, but remained at a low level.
London gains were muted after the Bank of England poured cold water on a newspaper report that it could delay the sale of government bonds again to help maintain market stability.
A BoE spokesperson described the Financial Times story as “inaccurate”.
The British pound retreated slightly after jumping Monday above $1.14 as the UK government sensationally ripped up its controversial debt-fuelled budget.
After a volatile few weeks during which the pound hit a record low, new finance minister Jeremy Hunt sought Monday to reassure investors as he scrapped tax cuts and warned of tough spending cuts.
Monday’s move, which dealt a blow to Prime Minister Liz Truss’s authority, sent sterling up as much as two percent at one point and the cost of government borrowing tumbled, while the FTSE 100 jumped.
“Investors continue to monitor the political and economic turbulence surrounding the UK,” noted XTB analyst Walid Koudmani.
Markets in China fluctuated a day after authorities delayed the release of third-quarter economic figures, which analysts said were likely to show the weakest growth since the pandemic owing to Covid-19 lockdowns.
The decision comes as the Communist Party holds a key gathering at which President Xi Jinping is expected to be handed a third term.
Oil prices slumped Tuesday in response on the expectation that the United States will draw more barrels than expected from its strategic reserves heading into the winter season.
- Key figures around 2030 GMT -
New York - Dow: UP 1.1 percent at 30,523.80 (close)
New York - S&P 500: UP 1.1 percent at 3,719.98 (close)
New York - Nasdaq: UP 0.9 percent at 10,772.40 (close)
London - FTSE 100: UP 0.2 percent at 6,936.74 (close)
Frankfurt - DAX: UP 0.9 percent at 12,765.61 (close)
Paris - CAC 40: UP 0.4 percent at 6,067.00 (close)
EURO STOXX 50: UP 0.6 percent at 3,463.83 (close)
Tokyo - Nikkei 225: UP 1.4 percent at 27,156.14 (close)
Hong Kong - Hang Seng Index: UP 1.8 percent at 16,914.58 (close)
Shanghai - Composite: DOWN 0.1 percent at 3,080.96 (close)
Pound/dollar: DOWN at $1.1332 from $1.1358 on Monday
Dollar/yen: UP at 149.21 yen from 149.04 yen
Euro/dollar: UP at $0.9862 from $0.9841
Euro/pound: UP at 87.01 pence from 86.64 pence
Brent North Sea crude: DOWN 1.7 percent at $90.03 per barrel
West Texas Intermediate: DOWN 3.1 percent at $82.82 per barrel