World shares and bond yields rose on Wednesday as positive economic data from Australia to the United States calmed fears of a global economic slowdown, although the rally lost momentum in European trade as oil prices reversed direction.
Asian stocks hit a two-month high, Japan’s and China’s main indices both rose more than 4%, and European markets were still in positive territory, putting them on track for their longest winning streak in five months.
Investors shrugged off further signs of weakness in global manufacturing, taking their cue instead from more encouraging indicators, such as US construction spending and Australian and Swiss GDP.
Stocks and investor confidence rose even though expectations rose that the Federal Reserve will raise interest rates later this year, something that hasn’t been in evidence much in recent weeks.
“Markets are definitely in a period where good news equals good news, with no immediate concern about what it might mean for, say, Fed expectations,” said Jim Reid, market strategist at Deutsche Bank in London.
The FTSEuroFirst index of leading 300 shares was up 0.2% at 1,335 points, on track for its fifth straight day of gains but off its earlier highs.
Germany’s DAX and France’s CAC were both up 0.2% too. Britain’s FTSE 100 was down 0.3%.
Investors also took heart from announcements by China earlier this week of a cut in bank reserve requirements and structural reforms to the world’s second-largest economy.
Japan’s Nikkei closed up 4%, Hong Kong’s HangSeng Index rose 3% and China’s main markets had their best day so far this year, rising more than 4%.
MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS rose 2.5% to its highest levels since Jan. 7, and building on gains in the previous session.
The Institute for Supply Management’s index of US factory activity, a closely watched measure of American manufacturing, rose more than expected last month. It also edged up for two months in a row, apparently ending its almost continuous decline since late 2014.
US construction spending rose to its highest since October 2007 and solid GDP data from Canada and Australia and Switzerland on Wednesday helped.
The data helped lift the US S&P 500 Index 2.39% to an eight-week high of 1,978.35. Stock futures pointed to a lower open on Wall Street.
The 10-year German Bund yield rose nearly 5 basis points to 0.20%, although Germany auctioned five-year bonds at a record low yield of -0.36%.
Gold slipped from its recent high to $1,230 an ounce but is still up 16% so far this year. Similarly, oil eased back on Wednesday but is still up more than 30% from its lows struck just three weeks ago.
