Jump in manufacturing data drives rally on Wall St

Friday, 26 Feb 2016 06:09:51 | Rebecca Hyam

The manufacturing sector accounts for 12 per cent of the US economy. (Tyrone Siu: Reuters)

A much stronger than expected monthly manufacturing report sent Wall Street more than 1 per cent higher in the overnight trading session.

Orders for durable goods increased by 4.9 per cent in January, to record their best gains since March last year.

Economists were tipping an increase of just 2.5 per cent for the month.

Analysts said the durable goods report represented the latest indication that the worst of the manufacturing US downturn was probably over.

The sector, which accounts for 12 per cent of the US economy, has come under pressure because of the strong US dollar and weak demand globally.

A separate report released overnight revealed initial claims for jobless benefits increased by 10,000 last week.

The four-week moving average of claims, which strips out the week-to-week volatility, fell by 1,250 to a seasonally adjusted 272,000.

It was the 51st week that claims remained below the 300,000 threshold, which is associated with a strong labour market.

That marks the longest run since the early 1970s.

The Dow Jones Industrial Average gained 1.29 per cent to close at 16,697.

The S&P 500 Index ended 1.13 per cent higher at 1,951 and the Nasdaq added 0.87 per cent to 4,582.

European stocks also rallied strongly, regaining the ground that was lost in yesterday's trading session.

In London, the FTSE 100 closed 2.48 per cent higher at 6,012.

Australian shares were on track for a solid start and at 8.30am AEDT, the ASX SPI 200 was up 0.7 per cent to 4,871.

At the same time, the Australian dollar was worth 72.33 US cents, having strengthened overnight.

On the cross-rates, it was buying 65.59 eurocents, 51.79 British pence, 81.63 Japanese yen and $NZ1.07.

West Texas Crude oil had edged up to $US31.30 a barrel, a barrel of Tapis was higher at $US35.52 and spot gold had edged up to $US1,233.81 an ounce.

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