An investor gestures as he checks the stock price monitor at a private securities company Friday Jan. 16, 2009 in Shanghai, China. Asian stocks have rebounded from the previous day’s rout, with Tokyo’s index gaining more than 2 percent, as the U.S. bailed out Bank of America again and a weaker yen lifted exporters like Toyota Motor Corp. The Shanghai Composite Index climbed 2.3 percent.
World markets rallied strongly Friday as investors breathed a sigh of relief that Bank of America, the biggest bank in the U.S., has been bailed out by the federal government as it tries to absorb losses from its acquisition of Merrill Lynch.
Markets across the world have posted heavy losses this week on renewed fears about the financial health of the global banking system, which became more acute Thursday in the run-up to the Bank of America bail out.
However, confirmation that the U.S. government would invest $20 billion in Bank of America in exchange for preferred stock and underwrite $118 billion of loans, provided much-needed relief to the markets.
The FTSE 100 index of leading British shares was up 106.55 points, or 2.6 percent, at 4,227.66, while Germany’s DAX jumped 130.79 points, or 3.0 percent, to 4,467.52. Meanwhile the CAC-40 in France was up 94.14 points, or 3.1 percent, at 3,090.02.
Earlier, Japan’s Nikkei 225 stock average added 206.84 points, or 2.6 percent, to 8,230.15, while Hong Kong’s Hang Seng edged higher 12.55 points, or 0.1 percent, to 13,255.51.
Despite the comeback on Friday, investors remain worried about banks’ problems, especially in the wake of Citigroup Inc.’s announcement it is to split into two companies — separating its traditional banking business from the company’s riskier assets —
as it unveiled a massive $8.3 billion fourth quarter loss.
Bank of America also reported a massive $2.39 billion loss for the quarter, although investors’ attention was focused on the bailout.
Mounting concerns about the banks were evidenced in the cost of dollar loans between banks, which rose Friday for the second day running, denoting tighter credit conditions.
The interbank lending rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — rose by around 0.06 percentage points to 1.14 percent. Over recent days, the big falls in the dollar rate experienced in the early part of the year had moderated and swung to increases as concerns about capital shortages in the banks swelled.
"There’s a renewal of heightened anxiety about the health of the banks and the corollary of that is this drift out (in the lending rate)," said Marc Ostwald, a strategist at Monument Securities.www.examda.com
Stock markets around the world had started 2009 on a relatively strong footing, glad to have put the previous year behind them and hopeful that the incoming Obama administration would be able to limit the length and depth of the recession in the U.S. with its massive stimulus plan.
Those hopes of a turnaround in the world economy by the middle of this year have evaporated as investors grappled with increasingly grim economic and corporate data from across the world.
"It’s tough to light a match in a downpour, and early-year flickering of a financial market candle of hope has been washed out," said Paul Mortimer-Lee, global head of market economics at BNP Paribas.
"A river of woeful economic news over recent weeks has not helped, but it is concerns over the dark clouds still clustered over the financial sector that are the real worry," he added.
Nevertheless, the Bank of America news has put those fears to bed for now and U.S. stocks are expected to continue their late session recovery from Thursday.www.examda.com
Dow Jones futures were 130 points, or 1.6 percent, higher at 8.292, while the broader Standard & Poor’s 500 futures rose 14.50 points, or 1.7 percent, to 853.80.
The markets will also be keeping a close eye on some key U.S. economic reports, including data on inflation and industrial production.
Economists believe the consumer price index fell 0.9 percent in December, less than the record 1.7 percent drop recorded in the previous month. Meanwhile, industrial output is expected to have fallen by 1 percent during the month.
Elsewhere in Asia, the Shanghai Composite Index climbed 1.8 percent, while benchmarks in South Korea, Singapore, Australia, Taiwan and India also advanced.
Oil prices continued to fluctuate with crude light, sweet crude for February delivery down 50 cents at $34.90 a barrel. Overnight, the contract fell 5 percent, or $1.88, to settle at $35.40, swooning as low as $33.20 during the session to a near five-year low.
The dollar strengthened 0.8 percent 90.48 while the euro rose 0.9 percent to $1.3262.
World markets rallied strongly Friday as investors breathed a sigh of relief that Bank of America, the biggest bank in the U.S., has been bailed out by the federal government as it tries to absorb losses from its acquisition of Merrill Lynch.
Markets across the world have posted heavy losses this week on renewed fears about the financial health of the global banking system, which became more acute Thursday in the run-up to the Bank of America bail out.
However, confirmation that the U.S. government would invest $20 billion in Bank of America in exchange for preferred stock and underwrite $118 billion of loans, provided much-needed relief to the markets.
The FTSE 100 index of leading British shares was up 106.55 points, or 2.6 percent, at 4,227.66, while Germany’s DAX jumped 130.79 points, or 3.0 percent, to 4,467.52. Meanwhile the CAC-40 in France was up 94.14 points, or 3.1 percent, at 3,090.02.
Earlier, Japan’s Nikkei 225 stock average added 206.84 points, or 2.6 percent, to 8,230.15, while Hong Kong’s Hang Seng edged higher 12.55 points, or 0.1 percent, to 13,255.51.
Despite the comeback on Friday, investors remain worried about banks’ problems, especially in the wake of Citigroup Inc.’s announcement it is to split into two companies — separating its traditional banking business from the company’s riskier assets —
as it unveiled a massive $8.3 billion fourth quarter loss.
Bank of America also reported a massive $2.39 billion loss for the quarter, although investors’ attention was focused on the bailout.
Mounting concerns about the banks were evidenced in the cost of dollar loans between banks, which rose Friday for the second day running, denoting tighter credit conditions.
The interbank lending rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — rose by around 0.06 percentage points to 1.14 percent. Over recent days, the big falls in the dollar rate experienced in the early part of the year had moderated and swung to increases as concerns about capital shortages in the banks swelled.
"There’s a renewal of heightened anxiety about the health of the banks and the corollary of that is this drift out (in the lending rate)," said Marc Ostwald, a strategist at Monument Securities.www.examda.com
Stock markets around the world had started 2009 on a relatively strong footing, glad to have put the previous year behind them and hopeful that the incoming Obama administration would be able to limit the length and depth of the recession in the U.S. with its massive stimulus plan.
Those hopes of a turnaround in the world economy by the middle of this year have evaporated as investors grappled with increasingly grim economic and corporate data from across the world.
"It’s tough to light a match in a downpour, and early-year flickering of a financial market candle of hope has been washed out," said Paul Mortimer-Lee, global head of market economics at BNP Paribas.
"A river of woeful economic news over recent weeks has not helped, but it is concerns over the dark clouds still clustered over the financial sector that are the real worry," he added.
Nevertheless, the Bank of America news has put those fears to bed for now and U.S. stocks are expected to continue their late session recovery from Thursday.www.examda.com
Dow Jones futures were 130 points, or 1.6 percent, higher at 8.292, while the broader Standard & Poor’s 500 futures rose 14.50 points, or 1.7 percent, to 853.80.
The markets will also be keeping a close eye on some key U.S. economic reports, including data on inflation and industrial production.
Economists believe the consumer price index fell 0.9 percent in December, less than the record 1.7 percent drop recorded in the previous month. Meanwhile, industrial output is expected to have fallen by 1 percent during the month.
Elsewhere in Asia, the Shanghai Composite Index climbed 1.8 percent, while benchmarks in South Korea, Singapore, Australia, Taiwan and India also advanced.
Oil prices continued to fluctuate with crude light, sweet crude for February delivery down 50 cents at $34.90 a barrel. Overnight, the contract fell 5 percent, or $1.88, to settle at $35.40, swooning as low as $33.20 during the session to a near five-year low.
The dollar strengthened 0.8 percent 90.48 while the euro rose 0.9 percent to $1.3262.