Global stocks up, dollar rises on economy hopes

Global stocks up, dollar rises on economy hopes
Comment E-mail Print Share
First Published: Tue, Jan 06 2009. 02 46 PM IST
Updated: Tue, Jan 06 2009. 02 46 PM IST
London: Investors bet on a global economic recovery on Tuesday, lifting European and Asian shares for the sixth and seventh consecutive sessions respectively, while the dollar climbed strongly against major currencies.
Oil prices fell back on profit taking after a rally prompted by violence in the Middle East and tension over Russia’s gas row with Ukraine.
Expectations that US President-elect Barack Obama will offer $310 billion in tax cuts as part of a $775 billion plan to support the economy have fed into a tentative recovery in global equity markets.
German politicians also debated tax cuts to revive Europe’s largest economy.
The pan-European FTSEurofirst 300 index of top European shares was up 0.8%. It has now gained about 16% since hitting a low in late November 2008.
“The main things are the Obama plans as well as the German fiscal stimulus package. Markets, rather than focusing on the dire economic and earnings data, are looking forward to the hope that these plans will work,” said Bernard McAlinden, market strategist at NCB Stockbrokers.
In Japan, the Nikkei 225 closed up 0.4% and the MSCI index of Asia-Pacific stocks outside Japan edged up for a seventh straight day, gaining 0.2%.
Oil prices were lower but only after a recent run up.
US crude prices were down 27cents at $48.54 a barrel after rising 5% overnight on fears that Israel’s deepening incursion into Gaza and a spat between Russia and Ukraine over gas prices could spark severe supply disruptions.
The dollar was up 1% against a basket of currencies, particularly gaining against the euro.
The euro fell to a three-week low against the dollar on speculation that the European Central Bank will cut interest rates further as regional price pressures ease amid broad economic weakness.
“With the situation in Europe deteriorating quite rapidly it leaves the euro quite vulnerable,” said Ian Stannard, senior currency strategist at BNP Paribas in London.
The euro fell around 1.3% to $1.3432 according to Reuters data. Against the yen, the dollar rose 0.2% to 93.57yen.
On euro zone government bond markets, the interest rate-sensitive 2-year Schatz yield was flat at 1.683%, while 10-year Bond yields were flat at 3.025%.
Comment E-mail Print Share
First Published: Tue, Jan 06 2009. 02 46 PM IST
More Topics: Markets | Global | Asia | Stocks | Europe |