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Sensex zooms 380 points, Nifty above 10,800: Three key global factors behind stock market rally

The Financial Express logo The Financial Express 07-01-2019 FE Online

The domestic stock markets Sensex and Nifty rallied on Monday morning, buoyed by a host of global factors including Federal Reserve Chairman Jerome Powell?s statement that the central bank would be patient and flexible in steering the course of interest rates. The Sensex rallied by more than 380 points to intra-day high of 36,076.95, while the broader Nifty 50 was trading firmly above the 10,800-level. We take a look at three key global factors propelling the Sensex, Nifty rally this morning.

Fed Chairman Jerome Powell?s boost

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?With the muted inflation readings that we?ve seen, we will be patient as we watch to see how the economy evolves,? Jerome Powell said on Friday, on a panel with his predecessors Janet Yellen and Ben Bernanke at the American Economic Association?s annual meeting in Atlanta. The stock markets took positive cues from the statement and Wall Street rebounded on Friday to close at its highest in two weeks.

Also read: Share market LIVE updates: Sensex up 320 points, Nifty above 10,800; Yes Bank, Titan shares rally

Asian stocks rally after dovish policy

Apart from Jerome Powell?s easing policy boost, China's move to make it easier for banks to lend also provided support to Asian equities, even as investors keep an eye on Beijing as negotiators begin talks to end a trade war between the world's top two economies, AFP reported. In the Asian markets, Tokyo's Nikkei ended the morning session 2.8% higher, while Sydney gained 1.3% and Seoul jumped 1.6%. Taipei surged 2% percent and Manila was up 1.7 percent with Jakarta 1.1 percent up. Hong Kong jumped more than one percent and Shanghai was 0.7 percent higher, with buying also boosted by news that the People's Bank of China had cut the amount of cash banks must keep in reserve, said the AFP report.

US- China trade war truce

Investors were also optimistic after Chinese and US officials kicked off talks to find a solution to the trade war that has seen the two sides impose tariffs in hundreds of billions of dollars worth of goods. US President Donald Trump on Friday raised hopes for an agreement, saying: "I think we will make a deal with China." Notably, the robust jobs growth data showing that more than 3,00,000 US jobs were created in December, also provided a boost to investor sentiment in the country as it tempered recent concerns about growth.

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