While you were sleeping: US growth surprises

While you were sleeping: US growth surprises

Aug. 28 (BusinessDesk) - Wall Street rose after a report showing the US economy grew more than expected, Chinese equities stemmed a five-day drop, and oil soared.

A Commerce Department report showed US gross domestic product grew at a 3.7 percent annualised rate in the second quarter, upwardly revised from the 2.3 percent pace reported last month.

The report came as the Federal Reserve's annual conference of central bankers, finance ministers, academics and financial market participants began, in Jackson Hole, Wyoming.

Policy makers’ comments will be scrutinised for fresh clues about the timing of a US interest rate increase.

Equities on both sides of the Atlantic climbed. At about 3pm in New York, the Dow Jones Industrial Average advanced 0.8 percent, while the Standard & Poor’s 500 Index climbed 1.7 percent, and the Nasdaq Composite Index increased 1.6 percent.

Rallies in shares of Chevron and those of General Electric, last up 5.2 percent and 3.1 percent respectively, led the Dow higher. All 30 stocks in the Dow were up as of about 3pm New York time.

"The US economy entered the current market turbulence with momentum, which will help it to shrug off the drag from China and other developing economies," Diane Swonk, chief economist at Mesirow Financial in Chicago, told Reuters.

China’s Shanghai Composite Index closed higher for the first time in six sessions with a 5.4 percent gain on the previous close.

In Europe, the Stoxx 600 Index finished the day with a 3.5 percent climb from the previous close. Germany’s DAX Index rose 3.2 percent, France’s CAC 40 Index increased 3.5 percent, while the UK’s FTSE 100 Index jumped 3.6 percent.

"The US is leading the way,” Peter Braendle, who manages about US$430 million at Zuercher Kantonalbank in Zurich, told Bloomberg. “This decline created the opportunities for some good prices in Europe. The economic situation is improving, which is helping the companies and the results we are getting are OK.”

Oil also rebounded, with West Texas Intermediate futures jumping more than 9 percent. In London trading, nickel, copper and zinc surged higher.

The latest reports on US jobs and housing were solid too. A Labor Department report showed initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 271,000 for the week ended August 22.

A National Association of Realtors’ report showed the pending home sales index rose 0.5 percent in July, following a revised 1.7 percent drop in June.

"Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer," Lawrence Yun, NAR chief economist, said in a statement.

"While demand and sales continue to be stronger than earlier this year, realtors have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust."

(BusinessDesk)

© Scoop Media