Stock markets around the world rallied Friday following some welcome good news out of the United States.
First, last week saw new unemployment claims drop back to a four-decade low. Then, the Labor Department said the core inflation measure was up on the year (although possibly not on track to ease the Federal Reserve’s concerns and signal the time is right for an interest rate hike). That pushed the dollar up about 0.2 %.
Thanks to this news, plus continued share price increases in China, the Europe-wide FTSEurofirst 300 was up for the second day in a row, by 0.9%, while the MSCI World Index is now up 6% in the month of October. The StoxxEurope 600 Index was up 0.8% in London trading Friday morning.
This month has been particular strong for global stock indexes, led by a rebound in Chinese share prices. That boost is largely thanks to investors’ expectations of a new round of government stimulus to reboot China’s slowing economy. The Shanghai Composite is up 6.5% this week and the Hang Seng Index in Hong Kong is up 2.5%. Both have seen double-digit percentage gains since the lows reached earlier in the fall.
But as MarketWatch reports, China isn’t the only country benefiting from stimulus expectations. Investors in Japan have boosted share prices in the Nikkei thanks to their hopes of Tokyo following Beijing’s lead.
While October trading has benefited from the strong numbers out of the U.S. and the expectations of stimulus in China, the world situation and American inflation picture might still not be healthy enough to convince the Fed that it’s finally time for a rate hike.
“It helps keep the possibility of a move at the end of this year alive, although our central scenario remains for a delay until at least March 2016,” according to a BNP Paribas note.