US stocks rally on stimulus signs as energy shares jump

US  stocks  rallied  as  earnings  beat  estimates,  consumer  confidence reached a seven-year high and investors speculated that central banks will add more economic stimulus. The S&P 500 Index rose 1.3% to 1,886.76. The Dow increased 263.17 points (1.6%) to 16,380.41.

Consumer sentiment in US increases to a seven-year high

Consumer  confidence  in  the  US  unexpectedly  rose  in  October  to  the highest level in seven years, showing a brightening in Americans’ moods as  gas  prices  drop  and  the  labor  market  gains  traction.  The  Thomson Reuters/University of Michigan preliminary sentiment index for this month increased  to  86.4  from  84.6  in  September.  The  median  projection  in  a Bloomberg survey of 67 economists called for 84.

Gain in home building points to sustained US growth

Builders  started  work  on  more  homes  in  September,  signaling  the  US economy will ride out a global slowdown.  Housing starts climbed 6.3% to a 1.02mn annualized rate  in September  from a 957,000 pace in August as multifamily  and  single-family  projects  advanced,  the  Commerce Department  reported.  The  increase  in  starts  was  in  line  with  the  median forecast surveyed by Bloomberg News, which projected a gain to 1mn.

ECB says too-slow governments a threat to Europe revival

ECB  Executive  Board  member  Benoit  Coeure  said  governments  must accelerate  plans  to  strengthen  their  economies  or  risk  derailing  the region’s  recovery.  While  Coeure  said  a  program  to  purchase  covered bonds will start within days, pressure is mounting on the ECB to also buy sovereign  bonds  as  the  18-nation  euro  area  struggles  to  recover  from  a debt  crisis  and  recession.  The  ECB  has  also  cut  interest  rates  to  record lows  and  offered  long-term  loans  to  funnel  credit  to  companies  and households. Coeure reiterated a pledge to do more if needed.

Russia rating cut by Moody’s on sluggish economic growth

Russia’s  credit  rating  was  cut  to  the  second-lowest  investment  grade  by Moody’s, which cited sluggish growth prospects worsened  by the crisis in Ukraine international sanctions. Moody’s downgraded the government one level  to  Baa2  from  Baa1  and  kept  a  negative  outlook  on  the  country’s rating.  It  is  in  line  with  Fitch  Ratings  credit  grade  and  one  notch  above S&P’s, which lowered Russia to BBB- in April.

India’s Prime Minister Modi uses oil price slump to ease curbs

A  22%  slump  in  oil  prices  this  year  and  the  end  of  state  polls  are emboldening  India’s  Prime  Minister  Narendra  Modi  to  press  ahead  with politically  risky  decisions  to  lure  investors  and  revive  the  economy.  His government freed diesel prices of state control for the first time in over a decade and raised tariffs on natural gas over the weekend in the biggest steps to curb subsidies and spur output. Keeping diesel affordable to the nation’s poor has cost the government and oil producers about 4trn rupees (US$65bn) in the past 10 years, according to oil ministry data.

Brent crude extends rebound on speculation drop excessive

Brent crude extended its rebound on speculation that a 25% drop from this year’s  high  was  excessive.  Brent  for  December  settlement  increased US$0.34 to end at US$86.16 on the ICE Futures Europe exchange.

Source: Bloomberg