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Stocks rally on stimulus hopes

Equity markets are in the black, as weak employment data from the US boosts hopes that the stimulus package will remain unchanged.

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The institute for supply management (ISM) report in the US, which surveys purchasing managers in the manufacturing industry, came in at 50.9 in June, which was better than expected. All areas of the survey did well except the employment division. This played on investors’ minds, as the official unemployment rate will be announced on Friday. The Federal Reserve has pegged its stimulus package to the unemployment rate, and if the number of jobless remains high the US central bank is more likely to keep its bond-buying programme in place.

European stocks finished higher after stronger-than-expected manufacturing figures from the eurozone. In fact the manufacturing purchasing managers index (PMI) is now at a 16-month high. Traders will be listening to Mario Draghi of the European Central Bank (ECB) on Thursday, when he makes his statement. Today’s report paints a picture of recovery.

In the US, the Dow is up 75 points at 15,075; trading volumes are expected to be low for the first half of the week as the US has a public holiday on Thursday.

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