Markets upbeat on U.S. Fed comments
HONG KONG – World stock markets jumped Monday as upbeat comments from the U.S. Federal Reserve's chairman and signs the American housing industry was healing strengthened confidence in a global recovery.
Tokyo shares led the way with a 3 per cent gain as Asia, taking cues after Wall Street closed Friday at its highest levels since November, staged a broad-based rebound from last week's heavy selling. European markets followed Asia in early trade, while oil prices rose above US$74 a barrel and the dollar climbed against the yen.
Investors poured into stocks after Fed Chairman Ben Bernanke said the prospects for a near-term recovery in the world's largest economy appeared to be good. Also boosting confidence was a better-than-expected rise in U.S. home sales last month that helped relieve some of the fears about American consumers that have held stock markets down lately.
There was evidence of economic renewal in Asia as well. Thailand's economy emerged from recession in the second quarter thanks to increased government spending and manufacturing resuming growth after steep declines.
"The numbers coming through continue to show economies are in better shape," said Song Seng Wun, economist at CIMB-GK research in Singapore. "But we could see more up and down in the markets as investors keep looking over their shoulder and asking themselves how much optimism is justified."
In Europe, Britain's FTSE 100 rose 0.9 per cent, Germany's DAX gained 0.8 per cent and France's CAC-40 edged up 0.7 per cent. With U.S. futures trading higher, Wall Street looked to add to its advance. Dow futures were up 38, or 0.4 per cent, at 9,527.
In Asia, Japan's Nikkei 225 stock average gained 342.85 points, or 3.4 per cent, to 10,581.05.
In China, the main Shanghai index was up for a third straight day, gaining 1.1 per cent to 2,993.43, after its sharp falls last week triggered selling around the world. Hong Kong's Hang Seng added 1.7 per cent to 20,535.94.
South Korea's Kospi advanced 2 per cent to it best finish in 13 months. Taiwan's index jumped 2.8 per cent and Australia's benchmark was 3.2 per cent higher. India's Sensex added 2.6 per cent, and Thailand shares rose 1.7 per cent.
Rising oil and metal prices inspired buying in Asia's heavyweight commodity producers. BHP Billiton Ltd, the world's largest mining company, added 4.3 per cent in Sydney, and Japan's oil powerhouse Inpex Corp. vaulted 5.6 per cent.
China's Sinopec, Asia's biggest refiner by volume, added 2.2 per cent in Shanghai after reporting a threefold jump in profit for the first six months of the year.
Monday brought a respite from concerns that rising unemployment and falling housing values will keep Western consumers from returning to their spendthrift ways, suffocating economic growth even once recessions end.
Prominent economist Nouriel Roubini said financial stress on consumers, combined with lingering damage to the financial system, weak profitability and fading effects of government stimulus measures, could make for weak economic growth over the next couple years.
"The recovery is likely to be anemic and below trend in advanced economies and there is a big risk of a double-dip recession," Roubini, a New York University professor who predicted the crisis, wrote in the Financial Times Sunday.
American consumers will likely be in focus again this week. High-profile readings on consumer sentiment due out Tuesday and Friday should help investors calibrate further their expectations about the health of American consumer spending, which makes up two-thirds of U.S. economy activity and has been central to Asian-export growth.
On Friday, Wall Street finished the week on a high note, with the Dow up 155.91, or 1.7 per cent, to 9,505.96, closing above 9,500 for the first time since Nov. 4.
The Standard&Poor's 500 index rose 18.76, or 1.9 per cent, to 1,026.13, its highest close since Oct. 6. And the Nasdaq composite index rose 31.68, or 1.6 per cent, to 2,020.90, reaching its highest close since Oct. 1.
Oil prices rose amid the brightening outlook for global demand. Crude for October delivery climbed 23 cents to $74.09 a barrel in Asian trade. The contract was up 98 cents on Friday.
The dollar rose to 94.78 yen compared to 94.38 yen, and the euro weakened to $1.4295 from $1.4341.
05:15ET 24-08-09
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