Wall St up as China boosts sentiment

Specialist Neil Gallagher, left, and trader Thomas Lee work on the floor of the New York Stock Exchange. Photo / AP
Specialist Neil Gallagher, left, and trader Thomas Lee work on the floor of the New York Stock Exchange. Photo / AP

Wall Street rose overnight, as did oil, after China's central bank lowered its reserve requirement ratio in an effort to stoke economic growth.

It was the fifth time in a year that China's central bank cut the amount of cash that banks must hold as reserves.

Wall Street moved higher. In 12.38pm New York trading, the Dow Jones Industrial Average rose 0.3 percent, while the Nasdaq Composite Index gained 0.5 percent. In 12.23pm trading, the Standard & Poor's 500 Index advanced 0.4 percent.

Oil also gained, bolstered by Saudi Arabia's promise to cooperate with other producers to help stabilise prices. The Saudi cabinet said in a statement it "will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action," according to Reuters.

Gains in shares of Caterpillar and those of DuPont, last up 1.9 percent and 1 percent respectively, led the Dow higher.

"Equity markets have been trading off the sentiment in oil, and if any of these growth stimulation attempts from China help oil, that will help US stocks," Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, told Bloomberg.

"Whether this has any meaningful impact on potential growth stimulation remains to be seen, but from a sentiment standpoint it should be a net positive," James noted.

The latest US housing data, however, were disappointing. The National Association of Realtors said its pending home sales index dropped 2.5 percent to 106.0 last month, the lowest level in a year, and down from an upwardly revised 108.7 in December.

"While January's blizzard possibly caused some of the pullback in the Northeast, the recent acceleration in home prices and minimal inventory throughout the country appears to be the primary obstacle holding back would-be buyers," Lawrence Yun, NAR chief economist, said in a statement. "Additionally, some buyers could be waiting for a hike in listings come springtime."

Analysts remained optimistic that US economic growth will pick up.
"The disappointing data tone points to ongoing weakness in the housing and manufacturing sectors," Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters.

"Nevertheless, with underlying domestic fundamentals remaining supportive to growth, the economic recovery should regain its footing in the first quarter."

In Europe, the Stoxx 600 Index finished the day with a gain of 0.7 percent from the previous close, bolstered by shares of commodity producers. The UK's FTSE 100 Index eked out a 0.02 percent increase, while France's CAC 40 Index rose 0.9 percent. Germany's DAX Index fell 0.2 percent.

- BusinessDesk

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