Business | Markets
Wall Street futures rise after rare calm weekend in markets
Wall Street prepared for its first relatively calm Monday in a month amid signs banks were lending to each other again, in an indication of hope the world's financial crisis may be easing.
- Reuters
- Published: 00:55 October 21, 2008
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- UAE indices continue gains
- India shares rise 2.5% but mart shaky
- Market rebound brings mixed reactions
- Finnish government unveils plan to protect finance sector
- S. Korea pledges $130b for markets
- UAE stock market indices reverse trend
- US stocks mark roller-coaster week with huge climb and fall
- European stocks end week of steep rises, deep tumbles
London/New York: Wall Street prepared for its first relatively calm Monday in a month amid signs banks were lending to each other again, in an indication of hope the world's financial crisis may be easing.
European banks prepared to make use of state rescue packages, helping shares rise by more than 2 per cent, and US stock index futures climbed ahead of the opening bell.
The comparative calm follows weeks of market-rattling weekend announcements since Leh-man Brothers collapsed in mid-September.
Governments have promised $3.3 trillion - about equal to the economic output of Germany - to guarantee bank deposits and bank-to-bank lending, and in some cases have taken stakes in banks with toxic assets.
"There's a perception that the crisis squeeze could be beginning to abate thanks to measures from global authorities over the past few weeks," said Philip Shaw, chief economist at Investec.
Pre-market stirrings came from Asia, where South Korea released a $130 billion rescue package, and China yesterday reported that economic growth eased in the third quarter and forecast a further slowing in the fourth quarter.
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Other major economies also showed signs of a slowdown. The Bundesbank said Germany's economy probably stagnated in the third quarter. In India, the central bank unexpectedly cut its key lending rate for the first time in more than four years.
But the interbank cost of borrowing dollars and euros fell across all maturities yesterday, offering hope that banks were regaining the confidence to lend to each other again.
The decline in interbank lending rates helped nudge US stock futures higher as did rallies in Asia and Eur-ope, where investors applauded additional measures by governments to tackle the global credit crunch.
"Whilst we are clearly not out of the woods yet, investors are looking for anything to hang their hats on," said Chris Hussain, senior sales manager at ODL Securities.
Oil braked its fall yesterday, rising nearly $2 on expectations Opec may reduce output. The price of crude oil has sunk more than 50 per cent since climbing to a record high above $147 per barrel in July.
One indicator of how the crisis is affecting the real economy was to come later yesterday when American Express, the fourth-largest US credit card issuer, reports earnings, probably before the closing bell.
Good news
On the political front, Democrat Barack Obama's campaign received a double shot of good news on Sunday when he reported raising a record $150 million in September and former Secretary of State Colin Powell endorsed Obama over fellow Republican John McCain.
Germany's cabinet approved strict conditions for banks that make use of its 500 billion euro rescue package, including limits on managers' salaries, bonuses and severance.
"The criteria for appropriate [remuneration] are based on responsibilities and personal performance, business conditions and the success and outlook of the company compared to others in its field," the provisions agreed by cabinet stated.
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