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Category: Business, Economics and Finance / Markets

Wall Street jumps on potential interest rate rise

Wednesday, 25 May 2016 06:31:07 | Thuy Ong

Wall Street sign in front of the New York Stock Exchange. (File photo: AFP)

Stocks on Wall Street have jumped by more than 1 per cent, with investors buoyed by the prospect of a rise in US interest rates over the next few months.

Comments from policymakers strongly indicate that interest rates may rise in June.

The Dow Jones Industrial Average jumped 1.2 per cent to 17,706.

The S&P 500 added 1.4 per cent to 2,076, while the Nasdaq gained 2 per cent to 4,861.

"Strong US new home sales data and a seemingly growing perception that the economy can cope with a gradual rise in US interest rates were seen as the catalyst for the increase in risk appetite," wrote Rodrigo Catril, currency strategist at NAB in a note to clients.

Overnight, European shares climbed to their highest point in almost four weeks, as financial stocks lifted equity markets.

In London, the FTSE 100 gained 1.4 per cent to 6,219, the German DAX jumped 2.2 per cent to 10,057, while in Paris, the CAC 40 soared 2.5 per cent to 4,432.

"European markets reacted positively to news that the Brexit camp is in disarray, along with another poll showing the Bremain camp comfortably ahead," Mr Catril wrote.

Locally, shares were set to follow overseas leads higher, with the ASX SPI 200 adding 1.4 per cent to 5,371.

Among currencies, the Australian dollar had slipped 0.6 per cent, and was buying 71.8 US cents.

It was also buying 78.9 Japanese yen, 49 British pence, 64.4 euro cents and $NZ1.066.

On commodities markets, iron ore and steel futures in China fell to 12-week lows on languishing steel demand.

Spot iron ore fell 4.8 per cent to $US50.20 a tonne.

Spot gold lost 1.2 per cent to $US1,227 an ounce, while West Texas crude edged 1.5 per cent higher to $US48.17 a barrel.

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