U.S. Stock Futures Advance After Australian Interest Rate Cut

By Saeromi Shin

Oct. 7 (Bloomberg) -- U.S. stock-index futures rose after Australia's central bank cuts its benchmark interest rate by one percentage point, raising speculation more central banks will follow suit to thaw credit markets and spur growth.

Standard & Poor's 500 Index futures expiring in December rose 15.50, or 1.5 percent, to 1,068.8 at 2:43 p.m. Tokyo time, erasing earlier losses of 0.6 percent. Dow Jones Industrial Average futures gained 135, or 1.4 percent, to 10,099. Nasdaq-100 futures added 19, or 1.4 percent, to 1,425.50.

The Reserve Bank of Australia cut its benchmark interest rate by one percentage point to 6 percent, the most since a recession in 1992 and twice as much as most economists forecast. Banks around the world have been hoarding cash, driving up lending rates, even as central banks including Australia's pump money into the financial system.

``The RBA needed to do something special, and they've done it,'' said Simon Bonouvrie, a portfolio manager who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``There's some talk around in the market that there could be a coordinated global interest-rate cut tonight and that the RBA is preempting that.''

U.S. stocks dropped yesterday, driving the Dow Jones below 10,000 for the first time in four years, after bank bailouts in Europe widened and commodities producers slid on concern global growth is slowing.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net.