BR: Australia stocks jump on rate cut, China index rebounds
HONG KONG — Australian stocks jumped to a near-seven-year high after an interest rate cut Tuesday and Chinese stocks rebounded from a losing streak, leading most other global markets higher as jitters about Greece's new government subsided.
KEEPING SCORE: European shares were up in early trading. France's CAC 40 added 1.4 percent to 4,693.18 and Germany's DAX gained 1.4 percent to 10,974.63. Britain's FTSE 100 rose 1.3 percent to 6,869.18. U.S. stocks were poised to open higher, with Dow futures up 0.4 percent to 17,361. Broader S&P 500 futures gained 0.4 percent to 2,024.50.
DECISION DOWN UNDER: The Reserve Bank of Australia decided to cut its benchmark interest rate by a quarter point to a record low of 2.25 percent in an attempt to revive the economy, which is weighed down by falling commodity prices. Like other countries that have taken similar action recently, Australian policymakers felt that with inflation easing as oil prices slump, they have more space to maneuver to bolster economic growth by cutting rates.
THE QUOTE: "Global markets remain choppy but the medium-term fundamentals remain in check, with central banks being the key drivers of sentiment and price action," said IG strategist Stan Shamu in a commentary. Markets have been reassured by signs that Greece's new government could reach a compromise with other euro nations over the terms of its international bailout that has imposed harsh austerity on the country. "After all the negative tape about Greece after fears primarily fuelled by Syriza coming into power, it seems we are starting to see a degree of calm prevail," Shamu said.
CURRENCIES: The rate decision pushed the Australian dollar 1.8 percent lower to 76.5 cents from about 78 cents Monday. In other currencies, the dollar slipped to 117.40 yen from 117.45. The euro fell to $1.1338 from $1.1341.
ASIA'S DAY: Australia's S&P/ASX 200 jumped 1.5 percent to close at 5,707.40, the highest level since May 2008, after the central bank's decision was announced at midafternoon Sydney time. The Shanghai Composite Index in mainland China surged 2.5 percent to 3,204.91. Japan's benchmark Nikkei 225 dipped 1.3 percent to 17,335.85 and South Korea's Kospi was little changed at 1,951.96. Hong Kong's Hang Seng rose 0.3 percent to 24,554.78.
CHINA REBOUND: The bounce in China's Shanghai Composite Index followed a five-day losing streak. Sentiment was boosted by growing speculation that authorities could introduce more stimulus after a pair of dismal factory reports. Higher oil prices lifted energy stocks such as PetroChina, which rose 4.2 percent.
ENERGY: U.S. benchmark crude oil gained $1.10 to $50.67 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.33 to close at $49.57 on Monday, its highest level in nearly a month, but is down about 38 percent in the past three months. Brent crude, a benchmark for international oils, rose $1.63 to $56.38 a barrel in London.
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