European markets are jumping on Tuesday afternoon, thanks to bad economic data from the US.
If you’re confused as to why bad data equals rising shares, here’s the reason: investors don’t want an interest rate hike and think bad data will encourage the US Federal Reserve to hold rates lower for longer (the Fed is meeting to decide on Thursday.)
US stocks rallied on poor manufacturing and retail data, and the FTSE 100 did the same.
The FTSE just closed up 0.87%, or 53.01 points at 6137.60. That looked impossible earlier in the day — the index slumped at the open and continued to collapse until the US data came out.
Check out how big an impact it had:
Stock markets elsewhere around Europe are also bouncing — Germany’s DAX is up 0.7%, France’s CAC-40 is 1.3% higher, and the Euro Stoxx 50 is up 1.1%.
Here’s Connor Campbell, an analyst at SpreadEx:
Worse than expected US retail sales (even if there was an upward revision for last month), a huge miss in the Empire State manufacturing index (which remained near its 6 year low despite analysts expecting a vast improvement) and a dismal industrial production figure was just the September rate hike-denying data the markets were after. Whilst another afternoon of awkward US numbers doesn’t guarantee the Fed won’t raise rates on Thursday, it is a firmer indication of the state of the US economy than has been provided for the past few weeks.
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