World stock markets soar after last week's rout

HONG KONG — Global stock markets rebounded strongly on Monday after last week's historic sell-off as governments from Europe to Australia and the U.S. intensified efforts to ease a financial crisis that threatened to the throw the world into recession.

Hong Kong's Hang Seng Index, which tumbled more than 7 percent Friday, soared 1,434.33 points, or 9.69 percent, to finish at 16,231.20.

Australian and Singapore indices jumped more than 5 percent, while South Korean and Chinese benchmarks added around 3.7 percent.

As markets opened in Europe, Britain's FTSE-100 shot up 5.6 percent, Germany's DAX climbed 6.4 percent and France's CAC-40 advanced 7 percent.

In Japan, where the Nikkei 225 tanked nearly 10 percent Friday to close out its worst week in history, trading was closed for a public holiday.

Markets around the world sprung to life as nations expanded their efforts to save a financial system, reeling from seizing credit markets and risky debt, that threatened to throw the global economy into recession.

On Monday five central banks _ including the U.S. Federal Reserve and the European Central Bank _ unveiled new measures to thaw frozen credit markets and bolster funding to banks. The Bank of England, the European Central Bank and the Swiss National Bank said they would provide unlimited U.S. dollar funds to financial institutions. The Bank of Japan said it was considering similar measures.

In Britain, three of the country's largest banks _ Royal Bank of Scotland Group PLC, Lloyds TSB Group PLC and HBOS PLC _ announced plans to take up to 37 billion pounds (US$63 billion) of government money to boost their balance sheets.

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Earlier in the day, Australia said it would guarantee bank and other lender deposits for three years.

The moves came after leaders of the 15 euro-zone countries said Sunday they would guarantee new bank debt until the end of 2009, allow governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion.

The global effort brought a measure of relief after investor panic sent world equities markets spiraling last week in one of the steepest declines in decades.

"The government measures genuinely do help market confidence," said Daniel McCormack, a strategist for Macquarie Securities in Hong Kong. "We are reaching a point where policy could soon start to have an impact on the credit markets and once it does that will help the equity markets."

In the U.S., investors were waiting to see if the Treasury Department's newly announced plan buy equity in troubled banks would help stabilize the volatility on Wall Street. Lawmakers have urged quick action by President George W. Bush on the effort, to be funded by the US$700 billion bailout he signed Oct. 3.

Wall Street stock futures showed a rebound was in store for the major indexes ahead of the opening bell on Monday. Dow Jones industrials futures rose 331 points, or 3.9 percent, to 8,701. Nasdaq 100 futures rose 51.7, or 4 percent, to 1,334; and Standard & Poor's 500 futures added 43, or 4.8 percent, to 934.04.

In a volatile session Friday in New York, the Dow Jones industrial average fell 128, or 1.49 percent, to 8,451.49, gyrating within a 1,000 point range. The average had its worst week on record in both point and percentage terms.

Financials helped lead Monday's advance in Asia, with leading Chinese lender Industrial & Commercial Bank of China, or ICBC, soaring 13.6 percent. Leading Australian banks such as Commonwealth Bank of Australia and ANZ Banking Group Ltd were also up sharply. Commodity issues gained as well.

Elsewhere in the region, Indonesia's key index, down sharply in early trade, gained 0.9 percent after the lifting of a trading suspension, imposed last Wednesday amid a freefall in share prices. The upswing followed government measures to free up liquidity, including easing regulations for share buybacks and corporate financial reserve limits.

Taiwan's benchmark index closed down 2.15 percent after the market was shut Friday for a national holiday.

Oil prices recovered, with light, sweet crude for November delivery up US$3.33 at US$81.03. The contract fell Friday US$8.89 to US$77.70, the lowest price since Sept. 10, 2007.

In currencies, the greenback gained against the yen to 100.57. The 15-nation euro bought US$1.3532.

Comments

[MovingtoNorway]

Why is this man laughing?

[joebhed]

There is a question here as to whether these actions will "free up" the credit markets again.

Those who ignore history are bound to repeat it.
Hoarding.
Capitalist survival tool.

Read up on the role that hoarding played in extending the depression after the crash.
The tragicomedy is that WE have not learned from that history.

It is not illegal for bankers to tie the national economy in knots by hoarding cash and choking the life out of credit and national economic activity.

But it should be illegal.

The FED opened its new "window" for the banks to the tune of several times the so-called consumer-led "stimulus" package, and yet it has had NO effect on moving the economy forward.

Why?

Hoarding.

Lesson learned?

[PT6]

Is this Market Rally the “October Surprise” that the Repubs have planned as they always do near an election?

Remember Repubs always “jack up” the market during voting season to give themselves a boost! Certainly, we must make Point that “MASSIVE COSTS for this BOOST IS BORN BY THE TAXPAYER and MIDDLE CLASS!

Demos must “take full credit for any improvements in the market” as we have supported the Bailout at a much higher percentage than the Repubs did. However, we must be cautious if it continues or watchful if it tanks again to make sure we are supportive.

A sustained run should be more of a benefit for Democrats than it is for the Repubs. We must be clear this is what we hoped to achieve!

We must also point out that just because Wall Street is happy that does not translate to Main Street and McCain is NOT REALLY trying any more than BUSH to help Middle class America.

The reform of Washington and Wall Street can not be left in the Hands of the people WHO COST Americans Trillions of dollars for a FAKE WAR and a Financial Crisis nearly as big as the Great Depression.

We must remind Americans that they have lost income under the Repubs while they gained under Democrats. Also Wall Street tends to do better under Democrats than Repubs.

[curiousasheck]

Shorts must be well rested after the vacation.

[sonoffestus]

This thing is going to take at least 3 years to stabilize and another 2 of flat linning and at least 2 more before we see sustained moderate growth in the market. Keep the seat belts fastened! Oh, and that's only if the whole thing doesn't tank, which could happen.

I am using the same information that the "experts" on wall st and in DC are using, but none of it is based on facts or any real knowledge of what is going on.

Seriously, last week , I felt much better when our financial advisor told us they didn't have ANY idea what was going to happen. At least he was honest.

[drkazmd65]

So,... any bets here on when the rug gets pulled out from under those reinvesting for short-term gain again?

I'm betting by end of week we are below 8000K,... although I hope I am wrong.

[hellboundtrain]

What addresses fixing the problem of the 58 to 65 TRILLION DOLLARS for the credit default swaps worldwide?

This has not ben donne yet, has it?

[drkazmd65]

Nope hellbound,... that was the background basis for the point I was trying to make.