Global Surge; China, Brazil, Soar 10%

123jump.com Staff
19 Sep, 2008
New York City

Stocks around the world rallied on the optimism that the U.S. plan to pump liquidity in the capital markets and purchase distressed mortgage bonds will resume normal lending activities. Regulators in the US and UK banned short selling. The move, though well intentioned appears to be motivated by the upcoming election than tacking the economic realities. Markets in Russia soared 29%, in China, Argentina and Brazil surged 10% and France and UK rose 9%. Indexes in U.S. rise 3.7%.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– U.S., Europe, Russia, Canada, China and India markets surged. Russia soared 29% and markets in China registered record one-day gains. Argentina and Brazil surged 10%.[/R]

Global Markets

Stocks surged in the U.S. and Europe after the U.S. government expanded its involvement in supporting the faltering mortgage markets and offered an insurance plan for money market fund. The government is struggling to come up with a comprehensive plan to tackle the falling housing market, but so far has offered a piecemeal solution. The additional liquidity provided by the Fed of $188 billion failed to support market confidence. The latest move to purchase distressed mortgage pool of securities and provide additional liquidity to the banks may only encourage more risk taking by the same participants that created the current financial mess.

Stocks in UK and Europe soar as optimism returned to the markets. UK benchmark index surged 8.9% and indexes in Paris soared 9%, in Germany scaled 5.6% and in Switzerland rose 6%. UK and U.S. regulators banned short selling in financial stocks. The move lifted financial stocks sharply. Royal Bank of Scotland surged 31% and led gainers in the FTSE 100 index. Realty stocks closed surged on the U.S. plan to inject liquidity in mortgage market. Russian market index soared 29%.

Russian market index soared 29%.

Stocks in Japan rose after the Bank of Japan in coordination with other central banks added liquidity in the system. The new dollar liquidity is expected to unlock inter-bank lending. Nikkei 225 index rose 3.8% after U.S. markets surged in the overnight trading on the hopes that the U.S. government will purchase troubled mortgages. Banks, shipping lines, realtors and export sensitive stocks rallied. Separately, Toshiba lowered its annual sales outlook for the current fiscal year.

Market indexes in Hong Kong and Shanghai registered record one-day gains. Investors stampeded after Beijing eliminated trading tax and Hong Kong added liquidity to the market. Earlier, U.S Federal Reserve and five other central banks added $247 billion in liquidity in the global credit markets. HK Monetary Authority added $1.56 billion in liquidity. Banks in China surged. ICBC, China Construction surged 16% and HSBC added 7.5%. Property stocks scaled higher. Shipping lines surged more than 25% after freight index rose.

Stocks in India tracked the rebound in the U.S. and Asian markets. In the overnight trading market averages in the U.S. surged on the optimism that the government plan to inject capital in the mortgage market will improve liquidity. Banks, realty and IT sector stocks rallied. The Sensex index surged 5.5% on 3 of 2 stocks closing higher. Satyam Computer Services and ICICI Bank increased rose 10%. Reliance Industries rose 6% after the company struck oil in 8 more locations.



North American Markets

Dow Jones Industrial Average increased 370.06 or 3.36% to a close of 11,389.75, S&P 500 Index closed up 48.08 or 3.99% to 1,254.59, and Nasdaq Composite Index increased 74.80 or 3.40% to close at 2,273.90. In Toronto TSX Composite closed up 776.99 or 6.44% to 12,841.56.

Of the 30 stocks in Dow Jones Industrial Average 25 closed higher and 5 closed lower.

AIG led gainers in Dow Jones Industrial Average with a rise of 57.25% followed by increases in Citigroup Inc of 22.5%, in Bank of America of 16.8%, in General Motors of 14%, in JP Morgan Chasse of 12.1% and in General Electric of 7.9%.

Wal-Mart Stores led decliners in the index with a loss of 2.4% followed by losses in Coca-Cola Company of 1.6%, in Johnson & Johnson of 1.4% and in Procter & Gamble of 1.4%.

Of the stocks in S&P 500 index, 401 increased, 96 declined and 2 were unchanged. Of the index stocks, 57 surged more than 10%, 240 rose more than 3% and 18 fell more than 3%.

Genworth Financial led the gainers in the S&P 500 index with a rise of 66% followed by gains in AIG of 43%, in WaMu Inc of 42.2%, in American Capital of 29.9%, in National City Corp of 27.9% and in Huntington Banc of 26.9%.

Office Depot led decliners in the S&P 500 index with a plunge of 8.3% followed by losses in MBIA Inc of 8%, in Plum Creek Timber of 6.2%, in Host Hotels & Resorts of 5.9%, in McGraw Hill of 5.2%, in Cintas Corp of 5.1% and in Hershey Company of 4.8%.

South American Markets Indexes

Argentina led gainers in the region with a surge of 10.24% followed by increases in Brazil of 9.4%, in Peru of 8.335, in Mexico of 4.57% and in Colombia of 3.55%.

Chile led decliners in the region with a loss of 2.57% followed by losses in Venezuela of 0.36%.

Europe Markets Review

In London FTSE 100 Index closed higher 431.30 or 8.84% to 5,311.30, in Paris CAC 40 Index increased 367.01 or 9.27% to close at 4,324.87 and in Frankfurt DAX index higher 326.11 or 5.56% to close at 6,189.53. In Zurich trading SMI increased 401.92 or 6.07% to close at 7,025.17.
Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 431.56 or 3.76% to 11,920.86, Hang Seng index in Hong Kong increased 1695.27 or 9.61% closed to 19,327.73. CSI 300 index in China lower 177.12 or 9.34% closed to 2,073.11. ASX 200 index in Australia increased 196.80 or 4.27% to close 4,804.10. The KL Composite index in Malaysia higher 34.04 or 3.43% closed to 1,025.70.

The Kospi Index in South Korea increased 63.36 or 4.55% to close at 1,455.78, SET index in Thailand closed higher 24.45 or 4.07% to 624.83 and JSE Index in Indonesia increased 104.06 or 5.82% to 1,891.73. The Sensex index in India increased 726.72 or 5.46% closed to 14,042.32.

Commodities, Metals, and Currencies

Crude oil increased $6.39 to close at $104.27 a barrel for a front month contract, natural gas decreased 9 cent to $7.53 per mBtu and gasoline futures increased 10.76 cents to close at 259.00 cents per gallon.

Wheat futures closed up 25 cents in Chicago trading and closed at $7.18 a bushel. Sugar increased 0.17 cent to 13.64 cents a pound. Soybean future closed up 27.50 cents to $11.43 a bushel.

Gold increased $20.00 in New York trading to close at $865.10 per ounce, silver closed up $0.07 cents to $12.63 per ounce and copper for the front month delivery increased 12.30 cent to $3.18 per pound.

Dollar edged lower against euro to $1.4485 and edged higher against yen to 107.20.

Yields on 10-year U.S. bonds increased to 3.79% and increased to 4.38% with 30-year of maturities.