US bourses smell animal spirits day after Fed rate cut

Spread the love

Risk on returns to global stock markets

By S Jha

New Delhi, September 19: The US equity exchanges were sharply higher in early session of Thursday. The pall of gloom over state of economy was lifted with fresh data set on jobless claims.

Dow Jones was trading 560 points higher. Nasdaq was trading firm with gains of 500 points. Other exchanges were sharply higher.

The tech-exchange, Nasdaq, was rallying with gains close to three per cent. The market participants are claiming that the equity markets are now poised for strength for the next three months at least.

Also Read: Stock Market sniffs textile gains amid Bangladesh upheavals

The US jobless claims data came lower than expectation. The weekly jobless claims fell by 12,000 to 219,000. This was far below estimates of the street.

The weekly jobless data and the 0.50 points rate cut by the US Federal Reserve appear to have woken up the animal spirits on the street. Analysts told business wires that equity markets are now poised for strength.

The tech giants such as Meta and financials were leading the rally in the US bourses. This is in line with assessment of analysts that rate cut will unleash sharp rally in equity markets if other macro data also fall in line.

Also Read: Stock Market measures 1st Fed rate cut in 4-yr euphoria

The manufacturing and the unemployment data in the recent weeks had brought the spectre of a weakening US economy. But with the jobless claims falling on a weekly basis lifted the dark clouds on the street.

“This Fed cut cycle is setting the stage for markets to be really strong,” CNBC quoted Fundstrat Global Advisors head of research Tom Lee saying. He added that the equity markets could be strong for one to three months.

The Asian markets – Japan’s Nikkei, Singapore’s Straits Times, and China’s Hang Sang – were sharply higher on Thursday. The Indian equity markets were volatile through the day after shedding gains of the early sessions.

Also Read: Five buzzing jewellers’ stocks with sound financials

Gains in Nasdaq have been seen to be sending the Indian IT stocks trending in the past. If Nasdaq holds over three per cent of the gains, then the IT listed firms in India may go trending on Friday.

Among the large caps, Wipro, Infosys, LTI Mindtree, TCS, and others have been showing strength in recent days. Newgen Software among the small caps has been trending for past several weeks.

Market participants also claimed that lower interest rate regime may trigger an intense fund flow to the emerging markets. They are sanguine about improved fund flows to the equity markets in near future.

Disclaimer: This article makes no recommendation for buy or sell of shares of any company.

Join WhatsApp channel of The Raisina Hills