Global stocks spike as US rate hike fears fade

LONDON – Global stock markets clawed back some recent losses Thursday after weak U.S. economic figures stoked expectations that the Federal Reserve won’t raise interest rates this year.

KEEPING SCORE: In Europe, Germany’s DAX rose 1.7 percent to 10,080 while Britain’s FTSE 100 advanced 1.1 percent to 6,337. The French CAC-40 was 1.4 percent higher at 4,673. U.S. stocks were poised for solid gains at the open, with Dow futures and the broader S&P 500 futures up 0.6 percent.

FED FOCUS: The Fed is back in focus as the main driver in financial markets. Though its rate-setting panel opted against raising interest rates in September following the summer’s volatility in markets, most traders thought a December increase was likely. Those expectations have taken a bit of a battering, not least from a run of soft data. As a result, many in the markets think the October policy meeting at the Fed may be more dovish than previously thought.

US DATA KEY: On Wednesday, government figures showed retail sales up a bare 0.1 percent in September from the previous month. There’s more U.S. data due later, including weekly jobless claims and regional manufacturing surveys. If they are on the whole soft, then traders may further ratchet up expectations that the Fed will continue with near zero interest rates for a while longer. Those super-low interest rates have helped buoy stock markets over the past few years.

ANALYST TAKE: “Given the splits now starting to appear within the Federal Reserve’s ranks at a very senior level, with respect to the timing of a rate rise this year, a continued deterioration in the data is likely to run the risk of making the hawks start to look a little foolish if they persist on sticking to their current narrative,” said Michael Hewson, chief market analyst at CMC Markets.

NETFLIX/WAL-MART DISAPPOINT: U.S. traders have other things to contend with too as the latest quarterly corporate earnings reporting season gathers pace. In an after-hours statement Wednesday, Netflix reported that it is hooking fewer U.S. viewers than it hoped. That followed Wal-Mart’s cautious earnings guidance, which caused its stock to slump 10 percent, its worst one-day decline since January 1988.

ASIA’S DAY: Japan’s Nikkei 225 rose 1.2 percent to 18,096.90 while Hong Kong’s Hang Seng index jumped 2 percent to 22,888.17. The South Korean Kospi added 1.2 percent to 2,033.27and Australia’s S&P/ASX 200 gained 0.6 percent to 5,230.00. The Shanghai Composite Index was up 2.3 percent at 3,338.07. Shares in Southeast Asia also were higher.

CURRENCIES: The euro fell 0.3 percent to $1.1437 while the dollar fell 0.6 percent to 118.12 yen.

ENERGY: The price of benchmark U.S. crude fell 50 cents to $46.14 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, lost 17 cents to $49.52 a barrel in London.