On 27 August, 2015 – Stock markets surge

Every major global stock market surged higher on Thursday helped by an unexpectedly strong economic report in the United States and a late rally in Chinese stocks.
United States
Stocks rallied for a second day, reversing many of the losses sustained earlier in the week when global markets tumbled. After briefly testing investors in the final hour of trading, stock markets ended sharply higher. Rallies took place in all the major stock markets of the world including in China whose economic challenges and erratic policy making helped set off the selling wave a week ago. Investors were encouraged by unexpectedly strong economic reports in the United States and Europe. The Dow Jones industrials were up 2.3%, the S&P gained 2.4% and the Nasdaq added 2.5%.
Stocks jumped at the opening bell after US second quarter growth was revised upward to an annualized pace of 3.7% from the first estimate of 2.3%. The data showed upward revisions to both consumer spending and business investment. The report provided further assurance that the American economy remained on an even keel. Another report indicated that weekly jobless claims continue to decline.
Giving the biggest boost to the S&P and Nasdaq were shares of Apple. The company invited journalists to a September 9 event where it is expected to unveil new iPhones. Tesla gained after its Model S P85D received the highest possible score in tests by Consumer Reports magazine.
Gold at the afternoon London fixing edged down US$1.75 to US$1,119.00. Copper futures were up 4.0% to US$2.32. WTI spot crude was up US$3.98 to US$42.58. Dated Brent spot crude was up US$4.25 to US$47.39. The US dollar was up against the euro, yen, pound and Swiss franc. However, it declined against the Canadian and Australian dollars. The Dollar Index was up 0.6%. The yield on US Treasury 30 year bond was down 1 basis point to 2.93% while the yield on the 10 year note was up 1 basis point to 2.19%.
Europe
European markets rebounded sharply higher Thursday after declining Wednesday. Investors were encouraged by the sharp rally in China’s stock market following its plunge over the past few days. Morale also improved after comments by NY Fed President William Dudley that the case for a September rate increase is “less compelling” given problems with the global economy and plunging stocks. The indices’ gains wiped out losses incurred earlier in the week. All added more than 3% on the day. The FTSE jumped 3.6%, the CAC added 3.5%, the DAX gained 3.2% and the SMI was 3.1% higher.
Adidas advanced after the CEO was quoted as saying that the sporting goods company is not experiencing any slowdown in China. Fresenius increased after pledging a significant 2015 dividend increase. Bouygues climbed after the conglomerate raised its 2015 profit target for its telecom unit. Pernod Ricard dropped after its full year net profit decreased 15% to €861 million from last year’s €1.02 billion. Lonmin was down after the platinum producer announced job cuts to weather depressed commodity prices.
CRH advanced after the company reported that its profit before tax for the first half of the year was €63 million compared to €61 million a year ago. CRH also announced it has reached an agreement to purchase CR Laurence from the Friese family for a total consideration of US$1.3 billion. Givaudan gained after the supplier of fragrances announced its financial ambitions and roadmap for the next five years. ISS rallied after the business services firm reported an increase in second quarter profit and raised its full year guidance for organic revenue growth. Anglo American, Antofagasta and BHP Billiton rallied.
Asia Pacific
Asian stocks rebounded Thursday after US stocks recorded their biggest rally since 2011 on signs the Federal Reserve may delay its September rate increase. Chinese shares also advanced for the first time in six days, easing fears that a prolonged slump would cause more problems for the Chinese economy. The Shanghai Composite rebounded over the critical 3,000 mark with a gain of 5.3%. Investors were buoyed by some late session buying amid an upswing in sentiment across the region. The Hang Seng jumped 3.6%.
The Nikkei climbed 1.1% on the heels of the US rally. The yen weakened thanks to improving risk appetite. NTT, DoCoMo, Sumitomo Chemical, Tokio Marine Holdings, Nippon Telegraph & Telephone and Obayashi were among the companies that gained on the day. Banks also advanced. Toyota Motor was up on news it has resumed operations near the Chinese port of Tianjin. JFE Holdings, electronics manufacturer Sharp and robot maker Fanuc declined as did shipping lines Kawasaki Kisen and Nippon Yusen. In economic news, Bank of Japan (BoJ) Governor Haruhiko Kuroda reiterated that falling oil prices will not stop the central bank from achieving its 2% inflation target with the current level of monetary stimulus. However, he added that the BoJ would make adjustments without hesitation if necessary.
Both the S&P/ASX and All Ordinaries added 1.2%. Banks advanced while miners were mixed. Australia’s capital expenditures fell more than expected in the second quarter of 2015. Spending on buildings and structures dropped 5.6% in the June quarter, led by a 10.9% decline in mining construction activity. The Kospi advanced for a third day, this time by 0.7%. The Sensex added 2.0%. Gains were helped by a firmer rupee and short covering on the eve of the expiry of August series derivative contracts.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Japan posts July unemployment, consumer prices, household spending and retail sales. France releases July producer price index and Germany posts preliminary August consumer prices. The UK reports its second estimate of second quarter GDP. The Eurozone releases August economic sentiment. In the US, July personal income and spending will be reported along with final August consumer sentiment. The annual central bankers’ meeting continues in Jackson Hole, Wyoming.
*Note — all releases are listed in local time.