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US open: Dow jumps 280 points as Wall Street pins hopes on new Chinese stimulus

08 Sep 15

LONDON (ShareCast) - (ShareCast News) - US stocks rallied early on Tuesday as investors returned from the Labor Day bank holiday buoyed by expectations of further stimulus measures from the People's Bank of China.
Just after 1500 BST, the Dow Jones Industrial Average was up 281 points to 16,383.65, while the S&P 500 and the Nasdaq gained 38 and 100 points respectively.

Overnight data from China painted a mixed picture, with exports shrinking for the second month, although not as much as feared.

The country's exports declined by 5.5% in dollar terms compared to the same month last year, better than consensus for a 6.6% fall and further decelerating following a decrease of 8.3% in July.

Imports from abroad were much weaker, with purchases decreasing at a significant 13.8% year-on-year rate in dollar terms, far exceeding the 7.9% consensus and the fall of 8.1% in July, casting some further doubt on domestic demand.

"Chinese economic data has been so disappointing lately, dealers will jump on any remotely positive news to justify their bargain hunting," said David Madden, market analyst at IG.

"Tuesday's rally will be a real test, as any big upward moves we have witnessed have been short-lived, and the underlying confidence just wasn't there."

However, Japanese stocks slumped to a seven-month low, as the Nikkei Stock Average relinquished its gains for the year after declining 2.43% on the day, bringing its monthly drop to approximately 8%.

Tuesday data

In what is a largely quiet session on the data front, investors will focus on a reading on consumer credit numbers for July, which are released at 2000 BST.

Meanwhile, the National Federation of Independent Business said its small-business optimism index rose 0.5 points to 95.9.

Of the 10 components, five posted gains, three fell and two remained unchanged. With just over a week to go until the next Federal Open Market Committee meeting, traders are still looking for clues over the timing of the first hike in interest rates.

They could get some more details when Minneapolis Fed President Narayana Kocherlakota, a non-voting member of the FOMC, speaks on the outlook for US monetary policy at Northwestern University in Evanston, Illinois, at 2215 BST.

Apple edges higher ahead of iPhone 6S unveiling

In company news, Apple rose 2.69% as investors eagerly awaited the unveiling of the tech giant's iPhone 6S and iPhone 6S Plus models at an event on 9 September.

General Electric gained 1.67%on news the European Union is set to give the green light to its $17bn takeover of Alstom SA's power business.

Coca Cola Enterprises climbed 1.02%, although analysts at RBC Capital downgraded their rating on the stock from 'outperform' to 'sector perform' and cut the target price from $54 to $48.

Earnings from digital-video recorder maker TiVo Inc, restaurant chain Dave & Buster's Entertainment and retailer Men's Wearhouse are all on tap after the close.

Elsewhere, European stocks rallied after Eurozone economic growth was revised higher and German trade data provided further encouragement, while oil prices rebounded. West Texas Intermediate rose 1.31% to $44.88 a barrel, while Brent gained 1.41% to $48.31 a barrel.

The dollar gained 0.46% against the yen but fell 0.64% against the pound and 0.14% against the euro, while gold futures were up 0.02% to $1,121.60.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are end of day values only.


Market Data

Currency US Dollars
52 Week High $58.77
52 Week Low $29.71
Shares Issued 472.43m
Market Cap $17,730m


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