Global stocks rise as investors weigh future of US interest rates

31/08/2016 05:19 AST

Global stock markets mostly rose on Tuesday as investors weighed the possibility and timing of another US interest rate increase this year.

France’s CAC 40 added 0.7 percent to 4,455 and Germany’s DAX rose 0.9 percent to 10,640. Britain’s FTSE 100 inched up less than 0.1 percent to 6,840. US shares were set for a quiet open, with Dow and S&P 500 futures both unchanged.

Benchmark US crude oil rose 37 cents to $47.35. It had fallen 66 cents on Monday. Brent crude, used to price oil internationally, rose 28 cents to $49.54 a barrel.

The dollar rose 102.32 yen from 102.21 yen late Monday. The euro was slightly lower at $1.1164 from $1.1177.

Major US banks posted solid gains on Wall Street as traders bet that the Fed was likely to nudge interest rates higher in December or even at its next policy meeting in September. Federal Reserve Chair Janet Yellen told a conference last week that the case for raising rates was strengthening given improvements in the economy. While rate increases can hurt stock markets overall, they tend to support bank shares. Also, some investors seem encouraged by the prospect that the Fed considers the economy strong enough to withstand another rate increase.

“The Federal Reserve’s rate-hike decision is largely based on three main indicators: the performance of the labor market, economic activity and inflation. In light of strong jobs reports over the last two months, the likelihood of an impending rate hike has substantially increased,” said Margaret Yang Yan, market analyst at CMC Markets Singapore.

Global markets are awaiting the US Labor Department monthly jobs data, being released Friday, for signs on whether a US recovery is on solid footing. Data on Japan released Tuesday showed an improvement in unemployment, but worries about growth momentum remain.

Shares in tech company Apple Inc. were down 1.4 percent in premarket trading after the European Union ruled that it has to pay $14.5 billion in back taxes to Ireland. Both Apple and Ireland said they would appeal the decision, which is the EU’s latest and most aggressive move in its campaign to have multinationals pay a fair tax rate.

Japan’s benchmark Nikkei 225 was down less than 0.1 percent, to close at 16,725.36. South Korea’s Kospi added 0.4 percent to 2,039.74. Hong Kong’s Hang Seng rose 0.9 percent to 23,028.02, while the Shanghai Composite inched up 0.2 percent to 3,074.68.

Saudi Gazette