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Equities
Global stocks were on the rise, buoyed by the U.S. Federal Reserve’s first interest rate cut in four years. The Fed cited “greater confidence” that inflation was on the right track in making the half-percentage-point reduction and signaled more cuts ahead.
Wall Street’s main indexes jumped at the open in the wake of the Fed decision and outlook.
The Dow Jones Industrial Average rose 1.13 per cent to 41,972.56, and the S&P 500 gained 1.5 per cent 5,702.63, and the Nasdaq Composite advanced 2.32 per cent to 17,980.89 at the bell.
The Toronto Stock Exchange’s S&P/TSX composite index was 1.01 per cent higher at 23,831.76, tracking a jump in global markets.
On Wall Street, markets are watching earnings from Olive Garden parent company Darden Restaurants Inc., Fedex Corp. and Lennar Corp.
“The key was never going to be about 25 or 50 [basis points]it’s all about the path forward and I think [the Fed] outlined a view where the economy is still doing pretty well,” said BNZ strategist Jason Wong in Wellington.
“This wasn’t a panicked 50 [basis point] cut.”
Overseas, the pan-European STOXX 600 was up 1.43 per cent in morning trading. Britain’s FTSE 100 rose 1.08 per cent, Germany’s DAX gained 1.63 per cent and France’s CAC 40 advanced 1.97 per cent.
In Asia, Japan’s Nikkei closed 2.13 per cent higher, while Hong Kong’s Hang Seng added 2 per cent.
Commodities
Oil prices rose after the Fed’s half-percentage point rate cut yesterday,helping Brent crude futures to recover from below US$69 last week – its lowest all year – to above US$74.
Brent futures for November were up 1.2 per cent to US$74.55 a barrel, while West Texas Intermedia (WTI) crude futures for October rose 1.2 per cent to US$71.79 a barrel.
“While the 50 basis point cut hints at harsh economic headwinds ahead, bearish investors were left unsatisfied after the Fed raised the medium-term outlook for rates,” ANZ analysts said in a note.
In other commodities, spot gold rose 0.7 per cent to US$2,575.90 an ounce, and U.S. gold futures rose 0.1 per cent to US$2,600.60.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 73.26 US cents to 73.90 US cents in early trading. The Canadian dollar was up about 0.54 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, edged higher to 100.68.
The euro rose 0.3 per cent to US$1.1152. The British pound gained 0.5 per cent to US$1.3278.
In bonds, the yield on the U.S. 10-year note was last up at 3.724 per cent.
Other corporate news
Toronto-Dominion Bank has named a new chief executive, with Raymond Chun set to take the reins from Bharat Masrani. Currently the head of Canadian banking, Mr. Chun will become chief operating officer effective Nov. 1 and then take over as CEO at TD’s next annual general meeting in April.
Economic news
Bank of Japan monetary policy meeting (through Friday)
Bank of England monetary announcement. The central bank kept its key rate unchanged at 5 per cent as expected as policy makers eye stubborn inflation.
(8:30 a.m. ET) Canada’s household and mortgage credit for July.
(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 14, which fell to their lowest level in four months.
(8:30 a.m. ET) U.S. current account deficit for Q2.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for September.
(10 a.m. ET) U.S. existing home sales for August, which fell a more-than-expected 2.5 per cent as house prices remained elevated despite a continued improvement in supply.
(10 a.m. ET) U.S. leading indicator for August. Consensus is a month-over-month decline of 0.3 per cent.
With Reuters and The Canadian Press