World markets surge as US data boost recovery hope
World stock markets soared on Thursday, with Hong Kong's benchmark vaulting more than 7 percent, as stronger-than-expected US economic
figures boosted confidence that the world's largest economy is on the mend. A mood of optimism also pervaded the markets as leaders of the world's 20 biggest developed and developing countries met to find a way out of the economic crisis. Huge gains in Asia and a strong open in Europe followed an overnight surge on Wall Street and extended last month's rebound amid tentative signs of stabilization in the hard-hit global economy
and banking industry. In European morning trading, Britain's FTSE 100 rose 3 percent to 4,072.46, Germany's DAX surged 4.6 percent to 4,310.82 and France's CAC 40 jumped 4 percent to 2,951.75. ``There's some renewed optimism around the G-20 meeting today and the possibility there might be something structured coming out of it,'' said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers. President Barack Obama and the summit host, British Prime Minister Gordon Brown, have expressed confidence that world leaders will come up with a strong agreement to address financial regulation, growth, and troubled banks. But French President Nicolas Sarkozy and German Chancellor Angela Merkel have refused calls for more government spending, and said the meeting must take concrete steps on tougher financial regulation. Investors in Europe were also awaiting a key interest rate decision from the European Central Bank
at 1145 GMT. The bank is expected to cut its benchmark interest rate by a quarter or a half percentage point to a record low as more grim economic news emerges from the euro zone, the 16 countries that share the euro. With many economists predicting the bank won't cut further after Thursday, interest will focus on what President Jean-Claude Trichet says about other measures it could take if the economy needs more of a push. In Europe and Asia, financial and auto stocks charged higher after US home sales, manufacturing and auto data suggested the US recession may be moving closer to a bottom. Car makers BMW, DaimlerChrysler and Renault jumped 9.6 percent, 9.1 percent and 8 percent, and tire maker Michelin added 10.9 percent. In Asia, Toyota Motor Corp. and Nissan Motor Co. strengthened 5.5 percent and 14 percent on US auto figures that were less dismal than feared. Investors were encouraged after US car sales jumped by nearly 25 percent last month from February, beating the typical rise and underpinning hopes of a turnaround in the American auto market. A rebound in pending US home sales in February from a record low, as well as improving manufacturing activity, added to a growing belief the most severe global downturn in decades may be moving close to a bottom.
(Economic Times dt. 3 April 2009)