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Global stocks turn higher on Bernanke remarks, recovery hopes

Global stocks turn higher on Bernanke remarks, recovery hopes
AFP
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First Published: Thu, Jun 10 2010. 12 57 AM IST
Updated: Thu, Jun 10 2010. 12 57 AM IST
London: Global stock markets rallied on Wednesday on the back of positive comments on the economic outlook by the head of the US central bank and reports of strong Chinese export growth, dealers said.
They said remarks by US Federal Reserve chairman Ben Bernanke that a fall back into recession was unlikely helped steady nerves and encouraged some bargain hunting after recent sustained losses.
Reports of a spike in Chinese exports suggested demand remains strong enough to keep the global recovery on track -- exactly what the markets wanted to hear after months of fears that European debt problems will hit growth prospects.
In New York, shares built on Tuesday’s gains of more than 1% as the market took further comments from Bernanke in a positive spirit and hoped for more good news in the Fed’s Beige Book report on US economic conditions.
The blue-chip Dow Jones Industrial Average was up 1.10% to trade back above the key 10,000 points level at around 1615 GMT, with the tech-rich Nasdaq Composite gaining 1.37%.
Bernanke told a Congressional committee that “the economy... appears to be on track to continue to expand through this year and next,” with growth of 3.5% likely to quicken in 2011 as consumer spending rises.
“All eyes are on ... Bernanke today,” said Jocelynn Drake at Schaeffer’s Investment Research, adding that the markets “remain cautious” given persistent concerns over the European debt crisis.
In Europe, London’s benchmark FTSE 100 index of leading shares closed up 1.15% at 5,085.86 points. In Paris, the CAC 40 gained 1.96% to 3,446.77 points and in Frankfurt the DAX jumped 1.98% to 5,984.75 points.
Will Hedden at IG Index in London said gains on Wall Street helped steady sentiment in European afternoon trade, with commodity prices rising to the benefit of the miners on the reports of a 50% jump in Chinese exports.
“The official export numbers come (on Thursday) ... If (the numbers) are accurate, tomorrow’s trading could see mining giants surfing the wave of market enthusiasm again,” Hedden said.
“The FTSE 100 might well have been soaring, given the commodities speculation, if it wasn’t for another deep slide from BP,” he noted, with the British energy giant tumbling after US President Barack Obama slammed its handling of the Gulf of Mexico oil spill.
BP shares closed down more than 4% but were off their lows.
In Paris, Xavier de Villepion of Global Equities warned that the current range-trading pattern in the markets coupled with modest turnover meant the upturn was likely to prove fragile.
Investors remained cautious and were not returning to the buy-side despite attractive prices after recent heavy losses, he said.
The euro meanwhile rose sharply, bolstered by the more positive tone, hitting $1.2041 in late London trade, up from $1.1956 earlier in the day and $1.1967 in New York late Tuesday.
The European single currency plunged at the start of the week to $1.1876 -- its lowest level for more than four years -- on concerns the European debt crisis is by no means over and could cripple the eurozone.
Gold, which hit a record just above $1,252 on Tuesday as investors bought into its safe-haven status, fell to $1,233.50.
Earlier Wednesday in Asian trade, most markets were firmer after Wall Street’s gains on Tuesday but Tokyo bucked the trend, shedding 1.04% as the yen gained against the dollar, penalizing exporters.
Elsewhere, Shanghai soared 2.78% after bank stocks were given a boost by reports that Agricultural Bank of China had been given the go-ahead to launch an initial public offering.
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First Published: Thu, Jun 10 2010. 12 57 AM IST
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