Surge in Europe also on hopes of more stimulus measures for US economy
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(HONG KONG) Asia's stock markets rocketed yesterday, led by Hong Kong, as dealers followed a Wall Street rally on hopes of more stimulus measures for the US economy following poor jobs data last week. The picture was pretty much the same in European markets as shares raced higher.
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US President-elect Barack Obama unveiled plans over the weekend for the largest US infrastructure investment programme since the 1950s and to create 2.5 million jobs, which analysts said could cost at least US$500 billion.
'After the confirmation of Obama's spending plans, a breath of fresh air has blown through the markets,' said Andrew Turnbull, senior sales manager at ODL Securities. 'Our stance is that this is a positive move by the US president-elect and the markets will welcome plenty more of this,' he added.
Even with the prospect of a federal budget shortfall approaching US$1 trillion, 'we can't worry, short term, about the deficit,' Mr Obama said on NBC. 'We've got to make sure that the economic stimulus plan is large enough to get the economy moving.'
Traders were also confident that the Big Three carmakers in the US were close to securing a handout to prevent them from bankruptcy and the industry from collapse.
In early US trading, the Dow Jones Industrial Average rose 225.64, or 2.61 per cent, to 8,861.06 after rising 259 points on Friday. Broader indexes were also higher.
The Standard & Poor's 500 index added 25.82, or 2.95 per cent, to 901.89; and the Nasdaq Composite Index jumped 34.43, or 2.28 per cent, to 1,543.74.
'Equity markets are maintaining the rebound seen in Asia as markets respond positively to the latest rescue packages being announced globally,' said Ian Stannard, an analyst at BNP Paribas.
Hong Kong soared 8.7 per cent, Seoul 7.5 per cent and Tokyo 5.2 per cent, while Sydney added 4.1 per cent, Taipei 4.57 per cent and Shanghai 3.57 per cent.
The Hang Seng is now above 15,000 for the first time since October 21. The benchmark Hang Seng Index rose 1,198.78 points at 15,044.87. Turnover was stronger than recent sessions at HK$63.88 billion.
The rally was also fuelled by Hong Kong Financial Secretary John Tsang's statement yesterday that the long-delayed programme to allow mainland Chinese residents to directly invest in the city's bourse has not been scrapped.
Dealers said Chinese banks jumped on reports the government may cut commercial banks' business tax to offset lower net interest margins resulting from the several central bank rate cuts.
Japanese shares soared after Wall Street rallied on hopes of fresh action by the US government to tackle the deepening recession. But analysts cautioned that the rebound could fizzle out later in the week if there is more bad news on the global economy.
The benchmark Nikkei-225 index closed up 411.54 points, or 5.20 per cent, at 8,329.05. The broader Topix index of all first section issues rose 26.06 points, or 3.32 per cent, to 812.08.
Indian shares climbed 2.2 per cent yesterday after an economic stimulus package and strong global markets boosted sentiment, but the gains were clipped on news of a fire at Reliance Petroleum's new refinery.
At the close, the index was up 197.42 points at 9,162.62, with all but three components rising. In the broader market, 1,391 gainers led 1,022 losers on normal volume of 244 million shares.
Markets in Singapore, Kuala Lumpur and Jakarta were closed for public holidays.
In Europe, national benchmarks climbed in all 17 western European markets that were open. The FTSE 100 gained 5 per cent, while France's CAC 40 rose 6.8 per cent. Germany's DAX added 6.7 per cent in afternoon trade. -- Reuters, AFP, Bloomberg, AP
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