Business | Economy
Obama's plan lifts markets
World markets surged on hopes that new government spending will limit the length and depth of the global economic slowdown, which has already pushed major Western economies into recession.
- AP
- Published: 22:14 December 8, 2008
London: World markets surged on Monday on hopes that new government spending will limit the length and depth of the global economic slowdown, which has already pushed major Western economies into recession.
Amid hefty gains in Eur-ope and Asia, the Dow Jones industrial average was up 268.73 points, or 3.1 per cent, at 8,904.15, while the broader Standard & Poor's 500 index was 33.27 points, or 3.8 per cent, higher at 909.34.
The FTSE 100 index of leading British shares was up 239.65 points, or 6.1 per cent, at 4,295.37, while Germany's DAX was 372.39 points, or 8.5 per cent, higher at 4,753.86. The CAC-40 in France rose 239.65 points, or 8.0 per cent, to 3,227.66.
Earlier, Hong Kong's Hang Seng index jumped 1,198.78 points, or 8.7 per cent, to 15,044.87 - its highest close in seven weeks - while Japan's Nikkei 225 average jumped 411.54 points, or 5.2 percent, to 8,329.05.
The gains across the world came despite Friday's news that American employers cut 533,000 jobs in November - the most in 34 years - as investors appeared to signal their support for growth-promoting measures around the world. Investors have been cheered by President-elect Barack Obama's plans, announced over the weekend, for the largest US public works spending programme since the creation of the interstate highway system a half-century ago.
"Certainly equity markets have started the week on a very positive note on talk of a stimulus package from the President-elect but whether it's a Santa Claus rally remains to be seen," said Neil Mackinnon, chief economist at ECU Group.
Stephen Lewis, chief economist at Monument Securities, said: "The details of the plan have yet to be published but talk of creating 2.5 million jobs and stepping up infrastructure spending to 1950s levels holds out some hope that a package commensurate with the scale of the negative forces operating in the US economy will eventually be presented."
Positive sentiment was further stoked by reports that China will this week look at new steps to expand the $586 billion of stimulus already planned and the announcement of additional spending plans in India after the central bank slashed its key interest rates by 1 percentage point.
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