Business | Markets
Global stocks rally after capital injection
Stocks rallied worldwide on Thursday while the dollar and government debt fell, their appeal as havens ebbing after central banks flooded markets with cash to bolster investor confidence battered by the week's financial maelstrom.
- Agencies
- Published: 00:18 September 19, 2008
New York: Stocks rallied worldwide on Thursday while the dollar and government debt fell, their appeal as havens ebbing after central banks flooded markets with cash to bolster investor confidence battered by the week's financial maelstrom.
Following coordinated measures by six of the world's top central banks to pump more than $180 billion into seized-up global money markets, oil rose to over $100 a barrel and the dollar dropped to a two-week low against the euro, while the yen fell broadly.
The massive burst of liquidity and talk of bank deals lifted global stock markets and curbed a flight to safety for bonds and the dollar a day after stocks worldwide plunged on fears of the turmoil seizing major financial institutions.
More calm
"There seems to be more calm in the market but we are not seeing a complete unwind of safety bids," said Michael Pond, Treasury strategist at Barclays Capital in New York.
However, persistent demand for "hard" assets like gold and oil were sign of jitters over the unprecedented market turbulence, Pond said.
In early morning trade, the Dow Jones industrial average was up 169.36 points, or 1.60 per cent, at 10,779.02. The Standard & Poor's 500 Index was up 23.18 points, or two per cent, at 1,179.57. The Nasdaq Composite Index was up 37.53 points, or 1.79 per cent, at 2,136.38.
Stocks also were helped by some positive news on the economic front, with a monthly survey by the Philadelphia Federal Reserve showing that factory activity in the US Mid-Atlantic region jumped unexpectedly in September, rising into positive territory for the first time in 10 months.
Prices for US government debt were lower. The benchmark 10-year US Treasury note fell 6/32 to yield 3.45 per cent, and the 30-year US Treasury bond fell 6/32 to yield 4.10 per cent.
The dollar fell, after having attracted safe-haven bids in recent weeks when US investors bailed out of overseas markets and sent the money back home.
The US Dollar Index, which measures its performance against a basket of major currencies, was down 0.24 per cent at 78.048. Against the yen, the dollar shed 0.40 per cent to 105.30.
The euro rose 1.78 per cent to $1.437.
Gold rallied, as it is one of the few trustworthy assets left, a trader said.
"What is left for people to put their money in?" asked Afshin Nabavi, head of trading at MKS Finance.
"They can't trust the banks, they can't trust insurance companies, they can't trust the stock markets."
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