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U.S. stock futures were higher Tuesday morning, pointing to a second day of gains, as Australia became the first G-20 economy to raise interest rates, fueling optimism about the global economic recovery. On Monday, U.S. stocks bounced back from a two-week selloff, with all three major indices up at least 1% ahead of the upcoming third quarter earnings season to be kicked Wednesday when Alcoa (NYSE: AA) -- the first of the Dow industrials -- reports.
No doubt, the biggest surprise this morning came when the Reserve Bank of Australia raised interest rate quite unexpectedly by a quarter point to 3.25 percent from a 49-year low of 3 percent. With recent signs the Down Under economy was improving, this rate hike sent the Australian dollar soaring to a 14-month high against the U.S. dollar. While normally rate hikes depress stocks as they raise the cost of borrowing and doing business, in this case investors seem reassured by this as they interpret this more as a sign the recovery from the global slump is gaining momentum.
Without much economic data due out today, investors will also focus on the forecast of the National Retail Federation, whichbullish about holiday sales, predicting a 1% decline in total sales to $437.6 billion for November and December combined.
Also, JPMorgan Chase & Co. said the disappointing September employment figures indicate it will take the U.S. four years to recover all the jobs lost during the recession.
Meanwhile, world stock markets rose Tuesday after better than expected U.S. data Monday and the surprise interest rate hike from Australia's central bank.
The dollar fell also on reports that Arab states and other countries were contemplating an end to the U.S. currency's role in pricing oil. Oil prices rose above $71 a barrel Tuesday.
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