HONG KONG (AP) – Australian stocks jumped to a near-seven-year high after an interest rate cut Tuesday and Chinese stocks rebounded from a losing streak, leading most other global markets higher as jitters about Greece’s new government subsided.
KEEPING SCORE: European shares were up in early trading. France’s CAC 40 added 1.4 percent to 4,693.18 and Germany’s DAX gained 1.4 percent to 10,974.63. Britain’s FTSE 100 rose 1.3 percent to 6,869.18. U.S. stocks were poised to open higher, with Dow futures up 0.4 percent to 17,361. Broader S&P 500 futures gained 0.4 percent to 2,024.50.
DECISION DOWN UNDER: The Reserve Bank of Australia decided to cut its benchmark interest rate by a quarter point to a record low of 2.25 percent in an attempt to revive the economy, which is weighed down by falling commodity prices. Like other countries that have taken similar action recently, Australian policymakers felt that with inflation easing as oil prices slump, they have more space to maneuver to bolster economic growth by cutting rates.
THE QUOTE: “Global markets remain choppy but the medium-term fundamentals remain in check, with central banks being the key drivers of sentiment and price action,” said IG strategist Stan Shamu in a commentary. Markets have been reassured by signs that Greece’s new government could reach a compromise with other euro nations over the terms of its international bailout that has imposed harsh austerity on the country. “After all the negative tape about Greece after fears primarily fuelled by Syriza coming into power, it seems we are starting to see a degree of calm prevail,” Shamu said.
CURRENCIES: The rate decision pushed the Australian dollar 1.8 percent lower to 76.5 cents from about 78 cents Monday. In other currencies, the dollar slipped to 117.40 yen from 117.45. The euro fell to $1.1338 from $1.1341.