A roundup of trading on major world markets:
NEW YORK – US stock markets rallied on Monday as upbeat data on consumer spending lifted hopes that economic growth would pick up speed, while Hurricane Irene caused less damage than feared.
The Dow Jones Industrial Average was up 254.71 points (2.26 per cent) to close at 11,539.25. The broader S&P 500 surged 33.28 points (2.83 per cent) to 1,210.08, while the tech-heavy Nasdaq Composite shot up 82.26 points (3.32 per cent) to 2,562.11.
The US Commerce Department reported that consumer spending, a pillar of the world’s largest economy, rebounded 0.8 per cent in July, after a 0.1 per cent dip in June. Investors also got an unexpected dose of positive news from Europe, where the sovereign debt crisis has been weighing on market sentiment.
Two Greek banks, Alpha Bank and Eurobank, announced that they were merging and receiving a sizable Qatari investment, the first bit of good news from Greece’s banking sector for some time.
Financial stocks rallied. Bank of America surged 8.1 per cent after saying that it would sell half of its stake in China Construction Bank for about $8.3 billion, a move that will help BofA shore up its capital base and ease investor concerns about its health.
Citgroup gained 4.9 per cent, while JPMorgan Chase was up 4.0 per cent and Goldman Sachs was up 3.9 per cent. Insurance giant Travellers closed the day with a gain of 5.1 per cent as fears subsided that multibillion-dollar damages from Irene would strain insurers’ balance sheets.
Airlines soared. American Airlines rose 8.6 per cent, Delta Air Lines was up 5.3 per cent and United Continental gained 3.7 per cent.
Bond prices slumped. The yield on the 10-year Treasury note grew to 2.27 per cent from 2.19 per cent late Friday, while that on the 30-year bond increased to 3.62 per cent from 3.53 per cent. Bond prices and yields move in opposite directions.
PARIS – European stocks rallied on Monday followingbetter-than-expected US consumer spending figures and hopes US Federal Reserve chairman Ben Bernanke will deliver if the economy needs another boost.
Traders said Bernanke’s speech on Friday suggested that if there is no immediate action in the offing, the Fed would step in if required to do so. Trade was quiet due to a public holiday in London, Europe’s main market.
Frankfurt’s DAX closed 2.39 per cent higher at 5,670.07 points and the Paris CAC 40 climbed 2.16 per cent to 3,154.20 points.
The euro firmed against the dollar to $US1.4508 from $US1.4490 in New York Friday.
The Greek market was the star performer, jumping 14.37 per cent after the announcement of a merger between Alpha Bank and Eurobank, with a sizable Qatari investment, the first bit of good news on the banks for some time.
In Paris, financials also rose with Societe Generale and Natixis up more than three per cent despite weekend comments by new International Monetary Fund chief Christine Lagarde that weaker European banks, heavily exposed to troubled eurozone debt, needed to recapitalise.
Oil prices rose meanwhile, helped by the US consumer spending data and with traders trying to see if there was any impact from Irene, the hurricane that swept up the US eastern coast over the weekend.
North Sea Brent for October delivery gained $US1.20 to $US112.56 and West Texas light sweet crude rose $US1.95 to $US87.32.
TOKYO – Tokyo share prices closed up 0.61 per cent on Monday after Finance Minister Yoshihiko Noda was elected leader of the ruling Democratic Party of Japan, making him set to become the nation’s new premier.
Stocks saw choppy trade and closed below intraday highs, following Wall Street’s solidly higher close last week with sentiment lifted by central bank chief Ben Bernanke’s speech on Friday.
The benchmark Nikkei 225 index of the Tokyo Stock Exchange gained 53.57 points to 8,851.35. The Topix index closed 0.37 per cent higher, gaining 2.76 points to 758.83.
The Nikkei gained despite a stubbornly strong yen, with the unit barely moving on the news Noda defeated Trade and Industry Minister Banri Kaeida in a second round of voting to effectively become Japan’s sixth new Prime Minister in five years.
The US dollar edged up to 76.69 yen from 76.65 in Tokyo afternoon trade.
The voting came after Naoto Kan resigned as premier on Friday amid criticism over his handling of the March 11 earthquake, tsunami and nuclear crisis.
Noda’s willingness to raise taxes in a bid to rehabilitate the nation’s tattered finances is seen as a short-term negative for stocks, said analysts, but such prudence is viewed as a positive for bonds.
WELLINGTON – In New Zealand, the benchmark NZX-50 index closed up 10.369 points, or 0.315 per cent, at 3306.
