Global markets bounce back on US housing news
Sunday, 26 August 2007
NEW YORK, Aug 25 (AFP): US and European stocks extended their rebound Friday as better than expected US housing data defused some of the gloom which has beset financial markets.
After struggling earlier in the day, Wall Street rallied after a government survey revealed a surprise rebound in new home sales last month.
The blue-chip-rich Dow Jones Industrial Average rocketed 1.08 per cent to close higher at 13,378.87 after opening slightly lower.
The Nasdaq composite finished up 1.38 per cent at 2,576.69, while the Standard & Poor's 500 broad-market index surged 1.15 per cent to end at 1,479.37.
"Upbeat economic data sent the Dow soaring to a triple-digit gain in light trading to end the week. A relative absence of negative news on the credit front also helped stocks," said Al Goldman, chief market strategist at AG Edwards.
European shares also finished out the week mostly higher.
In London, the FTSE 100 closed up 0.37 per cent at 6,220.10. In Frankfurt the DAX 30 lost 0.06 per cent to 7,507.27 and the Paris CAC 40 rose 0.83 per cent to 5,569.38.
The Euro Stoxx 50 index of leading eurozone shares rose 0.30 per cent to 4,238.61.
Wall Street shares gained after the US Commerce Department reported that new home sales rose in July by a surprise 2.80 per cent. Most analysts had expected sales to tumble. A separate snapshot on durable goods orders, which rose 5.90 per cent last month, also supported the gains.
Analysts said the stock gains would, however, likely be limited going forward as investors remain concerned about the financial storm afflicting the mortgage industry. Investors are also still trying to get a grip on the depth of the credit crisis buffeting the banking sector.
Some economists are paring back their forecasts for US economic growth amid the housing downturn and a surge in home foreclosures, fearing US homeowners will have to tighten their belts to weather the property slump.
"While shares have had a strong rebound over the last week or so, we are not necessarily out of the woods yet," AMP Capital Investors chief economist Shane Oliver said in Australia.
In other markets, Brazil's Bovespa leapt 2.22 per cent and the Mexican Bolsa added 1.97 per cent. Toronto's S&P/TSX index increased 0.51 per cent.
Earlier Friday Asian markets struggled, with Tokyo and Hong Kong falling on the coattails of Wall Street's lackluster performance Thursday.
Global markets have taken a beating this month on fears that damage from default US "subprime" mortgages-loans to customers with patchy credit histories-will drain the cash flow to the broader world economy.
The Chinese market provided a silver lining, as the benchmark Shanghai Composite Index hit another record high on strong corporate earnings growth.
The Index closed 1.49 per cent higher the day after breaching 5,000 points for the first time on a strong outlook for companies in China's soaring economy.
However the region's largest bourse in Tokyo fell 0.41 per cent, although the benchmark Nikkei-225 index was still well above the key 16,000-point level which it regained Thursday.
Hong Kong shares were also soft, with the key Hang Seng index closing down 0.20 per cent.
Australian stocks fell 1.20 per cent, but the index marked the strongest weekly gain in 32 years over the course of the past week.
After struggling earlier in the day, Wall Street rallied after a government survey revealed a surprise rebound in new home sales last month.
The blue-chip-rich Dow Jones Industrial Average rocketed 1.08 per cent to close higher at 13,378.87 after opening slightly lower.
The Nasdaq composite finished up 1.38 per cent at 2,576.69, while the Standard & Poor's 500 broad-market index surged 1.15 per cent to end at 1,479.37.
"Upbeat economic data sent the Dow soaring to a triple-digit gain in light trading to end the week. A relative absence of negative news on the credit front also helped stocks," said Al Goldman, chief market strategist at AG Edwards.
European shares also finished out the week mostly higher.
In London, the FTSE 100 closed up 0.37 per cent at 6,220.10. In Frankfurt the DAX 30 lost 0.06 per cent to 7,507.27 and the Paris CAC 40 rose 0.83 per cent to 5,569.38.
The Euro Stoxx 50 index of leading eurozone shares rose 0.30 per cent to 4,238.61.
Wall Street shares gained after the US Commerce Department reported that new home sales rose in July by a surprise 2.80 per cent. Most analysts had expected sales to tumble. A separate snapshot on durable goods orders, which rose 5.90 per cent last month, also supported the gains.
Analysts said the stock gains would, however, likely be limited going forward as investors remain concerned about the financial storm afflicting the mortgage industry. Investors are also still trying to get a grip on the depth of the credit crisis buffeting the banking sector.
Some economists are paring back their forecasts for US economic growth amid the housing downturn and a surge in home foreclosures, fearing US homeowners will have to tighten their belts to weather the property slump.
"While shares have had a strong rebound over the last week or so, we are not necessarily out of the woods yet," AMP Capital Investors chief economist Shane Oliver said in Australia.
In other markets, Brazil's Bovespa leapt 2.22 per cent and the Mexican Bolsa added 1.97 per cent. Toronto's S&P/TSX index increased 0.51 per cent.
Earlier Friday Asian markets struggled, with Tokyo and Hong Kong falling on the coattails of Wall Street's lackluster performance Thursday.
Global markets have taken a beating this month on fears that damage from default US "subprime" mortgages-loans to customers with patchy credit histories-will drain the cash flow to the broader world economy.
The Chinese market provided a silver lining, as the benchmark Shanghai Composite Index hit another record high on strong corporate earnings growth.
The Index closed 1.49 per cent higher the day after breaching 5,000 points for the first time on a strong outlook for companies in China's soaring economy.
However the region's largest bourse in Tokyo fell 0.41 per cent, although the benchmark Nikkei-225 index was still well above the key 16,000-point level which it regained Thursday.
Hong Kong shares were also soft, with the key Hang Seng index closing down 0.20 per cent.
Australian stocks fell 1.20 per cent, but the index marked the strongest weekly gain in 32 years over the course of the past week.