World shares and bond yields rose yesterday as positive economic data from Australia to the US calmed fears of a global economic slowdown, although the rally lost momentum in European trade as oil prices reversed direction.
Asian stocks hit a two-month high, Japan’s and China’s main indices both rose more than 4 percent, and European markets were still in positive territory, putting them on track for their longest winning streak in five months.
Investors shrugged off further signs of weakness in global manufacturing, taking their cue instead from more encouraging indicators, such as US construction spending and Australian and Swiss GDP.
Stocks and investor confidence rose even though expectations rose that the Federal Reserve will raise interest rates later this year, something that has not been in evidence much in recent weeks.
The FTSEuroFirst index of leading 300 shares was up 0.2 per cent at 1,335 points, on track for its fifth straight day of gains but off its earlier highs.
Germany’s DAX and France’s CAC were both up 0.2 per cent too. Britain’s FTSE 100 was down 0.3 per cent.
Investors also took heart from announcements by China earlier this week of a cut in bank reserve requirements and structural reforms to the world’s second-largest economy.
Japan’s Nikkei closed up four per cent, Hong Kong’s HangSeng Index rose three per cent and China’s main markets had their best day so far this year, rising more than four per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.5 per cent to its highest levels since January 7, and building on gains in the previous session. MSCI’s broadest gauge of the world’s stock markets also rose to the highest level in almost two months.
The Institute for Supply Management’s index of US factory activity, a closely watched measure of Americanmanufacturing, rose more than expected last month. Italso edged up for two months in a row, apparently ending its almost continuous decline since late 2014.
US construction spending rose to its highest since October 2007 and solid GDP data from Canada and Australia and Switzerland yesterday helped. The data helped lift the US S&P 500 Index 2.39 per cent to an eight-week high of 1,978.35.