Shares recovered on Tuesday after Monday’s selloff as Asian shares slowed down their decline, allowing investors to focus on positive earnings reports and economic data. Tuesday’s gains helped the Dow Jones recover from its lowest level in over six months. The Shanghai Composite fell 1.7% on Tuesday after tumbling 5% on the previous session. The rapid fluctuation in Chinese stocks has captured global attention and created concerns that global growth may be hampered. However, Tuesday’s relief in Chinese shares’ declines was enough to allow U.S. and European shares to post substantial gains after a week of mixed results. The Dow Jones Industrial Average added 189.68 points, or 1.1%, to close Tuesday’s trading session at 17630.27 and the S&P 500 index gained 25.61 points, or 1.2%, to trade at 2093.25 as both indexes erase Monday’s losses. Energy-related stocks rose by 3% after recovering oil prices helped keep the sector afloat despite a monthly decline of nearly 6%. Exxon Mobil (NYSE:XOM) rose 4.1% and BP (LONDON:BP) PLC added 3.4%. The Nasdaq composite added 49.43 points, or 1% to trade at 508921.
The Federal Reserve is scheduled to conclude it Federal Open Market Committee later today. Analysts currently expect that the growing U.S. economy and robust employment will be highlighted as the central bank prepares for an interest rate hike in September. Previous announcements from the Federal Reserve pointed toward a data-dependent approach to determining the right time to raise borrowing costs. Despite the fact that recent releases were mostly positive, there are many upcoming data releases on employment, GDP and inflation before September, making it unlikely that the minutes released today will hint too strongly at the exact time a rate hike would take place.
The relief in Asian markets also buoyed European shares to end a multiday streak of mixed results. The UK’s FTSE 100 added 0.7% as RSA Insurance (LONDON:RSA) rallied 14% after reports claimed that Zurich Insurance (SIX:ZURN) might acquire the company. The French CAC 40 rose 1.3% as all but four components post gains. Leading the gains were consumer names such as Carrefour (PARIS:CARR), Kering (PARIS:PRTP), and LVMH (PARIS:LVMH), all adding between 1.9% and 7.0%. The German DAX rose 1.5% as all but a single component post gains. Large exporting operations such as BMW (XETRA:BMWG), United Continental Holdings Inc (NYSE:UAL), Daimler AG NA O.N. (XETRA:DAIGn) and Volkswagen (XETRA:VOWG), rose between 1.4% and 2.3%.
Today’s main focus will revolve around the minutes released by the Federal Reserve when their two-day meeting will conclude. Other important economic data releases include U.S. pending home sales later today, Eurozone employment and U.S. GDP on Thursday, and Eurozone inflation on Friday with the release on the consumer price index (CPI).