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World stocks gain on hopes of U.S. bounce

First Published      Last Updated Jun 26 2014 09:36 am

Hong Kong • Asian stock markets rose Thursday while European gains were more restrained, as investors largely brushed off a poor quarterly U.S. economic report as a blip and instead factored in rebounding growth as policymakers maintain ultralow interest rates.

Investors were unfazed by the U.S. government's report that the world's biggest economy shrank 2.9 percent in the first quarter, the fastest contraction since the global crisis five years ago.

The downturn, due to a severe winter that closed factories, disrupted shipping and kept Americans away from malls, was seen as temporary, with growth rebounding sharply since spring. Investors may also be betting that it gives policymakers a reason not to raise rates.

"Weak U.S. data released overnight means the Fed will be in no hurry to tighten its policy stance," strategists at Credit Agricole CIB said in a report. "Firmer U.S. equities will provide a favorable backdrop for trading" in Asia.

The quarterly U.S. economic data was "undoubtedly a horrible number, [however] we should see a nice snap back in the second quarter; and this is far more important," said Craig Weston, chief market strategist at IG Markets in Melbourne.

He added, "Asia has largely celebrated the weak U.S. GDP, with yield stocks doing nicely, notably in Australia," where the S&P/ASX 200 rose 1.2 percent to 5,464.30.

In early European trading, France's CAC 40 edged up 0.2 percent 4,467.07 while Germany's DAX inched 0.1 percent higher to 9,874.59. The FTSE 100 index of leading British companies was little changed at 6,734.26.

U.S. stocks were poised for a flat open after inching higher the previous day. Dow futures were little changed at 16,770.00 while broader S&P 500 futures slipped 0.1 percent to 1,947.30.

Japan's Nikkei 225 added 0.3 percent to close at 15,308.49 while South Korea's Kospi added 0.7 percent to 1,995.05.

Hong Kong's Hang Seng jumped 1.5 percent to 23,197.83 while the Shanghai Composite Index in mainland China gained 0.7 percent to 2,036.68.

In energy trading, the price of U.S. benchmark crude for August delivery rose 1 cent to $106.51 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents to settle at $106.50 on Wednesday.

In currencies, the dollar slipped to 101.75 Japanese yen from 101.81 yen in late trading Wednesday. The euro fell to $1.3617 from $1.3627.