US markets lead a global rally on the back of stronger economic data and oil price momentum

Markets

US markets rallied yesterday led by energy stocks, which continued to benefit from the rise in oil prices, and more positive sentiment on a Greek bailout deal. The Dow rose 236.36 points, or 1.33 percent, to 18,000.4, the S&P 500 gained 25.05 points, or 1.2 percent, to 2,105.2 and the Nasdaq Composite added 62.82 points, or 1.25 percent, to 5,076.69.

Asia Pacific markets also responded positively to Wall Street gains on Thursday with all the major markets ending higher with the Nikkei up 1.68 per cent to close at 20,382.97, Hong Kong’s Hang Seng rising 0.8% to end the day at 26,907.85 and the S&P ASX 200 booked a 1.43% increase closing at 5,556.7. The Straits Times Index ended 30.64 points or 0.93% higher to 3,325.77. While China’s Shanghai Composite climbed just 0.3%, it is still the world’s best performing stock market with a 149% rise in the past year, according to CNN.

Economic news

The US Commerce Department released its eagerly anticipated retail sales data on Thursday with 1.2 percent growth last month, surging from the revised 0.2 percent gain in April. US households increased spending on cars, furniture, clothes, online shopping, sporting goods and building materials. This was despite increases in petrol prices, the latest sign economic growth is finally gathering steam according to a report in Reuters.

This solid retail sales data combined with robust job growth in May and stabilising manufacturing activity supports the view that the Fed will raise interest rates this year. Although in a report released on Wednesday by the World Bank, which trimmed 2015 global growth forecasts down 0.2% to 2.8%, chief economist Kaushik Basu has urged the Fed to put off any rate hikes until next year to assist global economic recovery especially in emerging markets.

In other economic news, Standard Poor’s has confirmed the US credit rating of AA+, citing in a statement the high level of government debt as well as a lack of political cohesion amongst the main political parties as being the major constraints to the rating, reported AAP.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.