US stocks put on strong gains in their first positive day this week, shrugging off the 6.4 per cent plunge in Japanese markets.
The Australian dollar also had a good night, surging to its highest point in a week.
The Dow Jones Industrial Average was up 180.85 points (1.21 per cent) at 15,176.08.
The broad-based S&P 500 gained 23.84 (1.48 per cent) at 1,636.36, while the tech-rich Nasdaq Composite added 44.94 (1.32 per cent) at 3,445.37.
US retail sales were up 0.6 per cent in May over April, beating expectations, and were a positive for the economy, driven by a surge in auto sales.
“Car sales and retail sales in general are decent, suggesting consumers are recovering from the pain of higher taxes,” said Chris Low of FTN Financial.
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Still, questions remained over whether that pace can be sustained and what it means for the Federal Reserve’s stimulus program, analysts said.
Shares in cosmetics company Coty finished their first day of trade down 0.8 per cent at $17.36 after raising around $1 billion in an IPO priced at $17.50.
Investment guru Warren Buffett’s Berkshire Hathaway B shares rose 1.9 per cent.
Bond prices rebounded from Wednesday’s losses. The yield on the 10-year US Treasury fell to 2.17 per cent from 2.23 per cent, while the 30-year dropped to 3.33 per cent from 3.38 per cent. Bond prices move inversely to yields.
The Australian dollar surged to its highest point in a week with it looking less likely the US Federal Reserve will wind back its economic stimulus program.
Early this morning the local unit was trading at 96.40 US cents, up from 94.77 cents on Thursday.
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BK Asset management managing director Kathy Lien said speculation about the possible tapering of the Federal Reserve’s asset purchase program was the main factor driving the Australian dollar and share markets higher.
“The Fed may not be as eager to taper asset purchases as was suggested,” she said from New York.
“That’s, obviously, good for risk assets and negative for the US dollar.”
The US and Australian dollars continue to struggle against the yen as investors wait for more to be done to give the struggling Japanese economy a boost.
The Australian dollar is at its lowest point against the yen this year, trading around 92 yen after spending most of April above 100 yen.
The US dollar is trading near two-month lows against the Japanese currency.
“I think, overall, there’s been a lot of volatility in Japanese markets,” Lien said.
“Investors are disappointed at the lack of action on both the fiscal and monetary front and they’re punishing the Japanese government for it with the volatility in the Nikkei (share index) and the yen.”
She said the main focus for markets on Friday night, Australian time, would be the release of the University of Michigan consumer sentiment survey.
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