US Shares Open Higher on ECB Stimulus, Tariff Delay

By Investors Hub

The major U.S. index futures are pointing to a higher opening on Thursday, with stocks likely to extend the strong upward move seen over the course of the previous session.

A positive reaction to the European Central Bank?s monetary policy decision is likely to contribute to initial strength on Wall Street, with the ECB cutting rates and announcing a massive new bond-buying program.

The ECB lowered its main deposit rate by 10 basis points to 0.50 percent and announced plans to restart its quantitative easing program by purchasing assets at a pace of 20 billion euros per month beginning November 1st.

The central bank said it expects to keep interest rates at their present or lower levels until it has seen a sufficient increase in the inflation outlook.

The asset purchase program is expected to run for as long as necessary to reinforce the accommodative impact of the ECB?s policy rates.

Following the ECB announcement, President Donald Trump took another shot at the Federal Reserve, which is due to announce its latest monetary policy decision next week.

?European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports,? Trump tweeted. ?And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!?

Early buying interest is also likely to be generated in reaction to news that Trump is temporarily delaying raising tariffs on $250 billion worth of Chinese imports.

Calling the move a ?gesture of good will,? Trump delayed raising the tariffs rate from 25 percent to 30 percent from October 1st to October 15th.

After moving modestly higher early in the session, stocks saw further upside over the course of the trading day on Wednesday. With the advance on the day, the major averages ended the session at their best closing levels in over a month.

The major averages reached new highs going into the close, ending the session at their best levels of the day. The Dow advanced 227.61 points or 0.9 percent to 27,137.04, the Nasdaq jumped 85.52 points or 1.1 percent to 8,169.68 and the S&P 500 climbed 21.54 points or 0.7 percent to 3,000.93.

The strength on Wall Street came following news that China is granting tariff exemptions for 16 types of American-made products as a sign of goodwill ahead of the next round of trade talks.

The list included varieties of animal feed such as alfalfa and fish meal, cancer drugs gefitinib and capecitabine, base oil for lubricants and lubricating grease, and some farm chemicals.

The Chinese Customs Tariff Commission said the tariff suspension would take effect next Tuesday and remain in place for a year.

Stocks also benefited from optimism about new global stimulus ahead of the European Central Bank’s monetary policy decision as well as next week’s Federal Reserve meeting.

On the U.S. economic front, the Labor Department released a report showing a modest uptick in producer prices in the month of August.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in August after rising by 0.2 percent in July. Economists had expected prices to come in unchanged.

Excluding food and energy prices, core producer prices rose by 0.3 percent in August after edging down by 0.1 percent in July. Core prices had been expected to increase by 0.2 percent.

Computer hardware stocks showed a substantial move to the upside over the course of the trading session, driving the NYSE Arca Computer Hardware Index up by 2.3 percent to its best closing level in a year.

Significant strength also emerged among networking stocks, as reflected by the 2.3 percent jump by the NYSE Arca Networking Index. The index ended the session at a one-month closing high.

Steel stocks also turned in a particularly strong performance on the day, resulting in a 2 percent advance by the NYSE Arca Steel Index.

Telecom, brokerage, and housing stocks also saw considerable strength, moving higher along with most of the other major sectors.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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