The dollar gained and global equity markets rallied yesterday, adding an upbeat note to an otherwise dismal third quarter on hope the commodities rout has run its course.
Major equity indexes around the world declined more than 10 per cent over the quarter, pulled down by fears of a global economic slowdown brought on by slower growth in China, which also took its toll on commodities.
Still, analysts questioned the strength of the equity market’s rally.
“People looked at yesterday’s market as maybe setting a near-term bottom,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
“Whether it can hold, that’s been the problem. It’s going to a test to see whether we can get one or two solid days of gains.”
Major European indices rose more than two per cent, and stocks on Wall Street jumped more than one per cent. The FTSEuroFirst 300 index rose 2.5 per cent, while MSCI’s all-country world index rose 1.75 per cent.
The Dow Jones industrial average rose 207.15 points, or 1.29 per cent, to 16,256.28. The S&P 500 gained 27.13 points, or 1.44 per cent, to 1,911.22 and the Nasdaq Composite added 80.04 points, or 1.77 per cent, to 4,597.37. The Nasdaq biotech index, which had skidded 13.5 per cent over the past five days, rose 3.2 per cent yesterday even as it posted a 19.8 loss for the quarter.
“You’re starting to see some of the first real buying at what’s really pretty dramatically reduced prices in some sectors,” Meckler said.
Shares in mining and trading firm Glencore, which plummeted on Monday along with commodity prices, jumped 14.1 per cent after it sought to reassure investors over its debt. Its shares had risen 17 per cent on Tuesday.
The dollar got a lift from American private-sector jobs data, which bolstered bets a hike in US interest rates will come in 2015, while the euro fell back on a report eurozone inflation had turned negative.
US private employers added 200,000 jobs in September, beating forecasts in a report that suggests jobs growth may be sufficient for the Federal Reserve to raise interest rates later this year, according to the ADP National Employment Report.
The dollar index, a basket of major trading partner currencies, rose 0.45 per cent for the day and was on track for a 0.7 per cent gain for the three months ending yesterday.
The euro fell against the dollar by 0.67 per cent to $1.1170.