A German stock trader is all smiles as he looks at his screens at the stock exchange in Frankfurt/Main on Monday. -- PHOTO: AFP
LONDON - GLOBAL stock markets soared on Monday as governments across the world pumped billions of extra dollars into banks crippled by the credit crunch.
Wall Street shares skyrocketed at the opening, with the Dow up more than four percent, while European markets jumped by between five and eight percent in afternoon deals. Hong Kong surged ten percent in earlier Asian trade.
Major indices had plunged by almost a quarter in value last week on a collapse of confidence in the global financial system, while some shed as much as 10 percent just on Friday in the worst performance for 21 years.
'We have had our first significant bounce in the markets for sometime now,' City Index market strategist Joshua Raymond said in London.
'It's a dangerous time to start believing we have hit a bottom in the markets. With the volatility here to stay and confidence likely to seesaw for sometime, we are only really going to be able to tell if we have hit a bottom a month after we have done so.'
Investor sentiment got a boost after the leaders of the 15-country eurozone, following the lead of Europe's financial giant Britain, agreed over the weekend on a high-stakes joint bid to pull the world financial system back from the brink of collapse.
'The main message from the weekend meetings is that governments the world over seem to get the severity of the financial crisis now and are intent on taking extreme measures to improve matters,' said Patrick O'Hare, analyst at Briefing.com.
'For now, things are moving in the right direction, both on the credit market and stock market fronts,' he said.
French President Nicolas Sarkozy on Monday announced a 360-billion-euro (S$721 billion) bail-out plan to pump capital into the country's banks and underwrite loans between them.
France will guarantee up to 320 billion euros of interbank loans taken out until December 2009, and set aside up to 40 billion euros to recapitalise French banks, Mr Sarkozy said.
The German government also launched its own financial rescue scheme includes 80 billion euros in fresh capital for banks and 400 billion euros in loan guarantees.
Britain said it would invest up to 37 billion pounds in ailing British banks Royal Bank of Scotland, HBOS and Lloyds TSB.
Central banks in Europe fired a new broadside on Monday to free up frozen lending, by providing commercial banks with unlimited amounts of dollars in a joint operation that might be reinforced by their key Japanese ally.
Meanwhile, the United States said it was ready to buy equity in a broad array of financial institutions as part of the 700-billion-dollar bail-out for the banking sector that was agreed 10 days ago.
Under the US Troubled Assets Relief Program (TARP), the government is authorized to take a wide range of exceptional measures, including the purchase of toxic mortgage-related assets from ailing financial institutions, in a bid to unclog frozen credit flows.
Wall Street was also lifted by news that Mitsubishi UFJ Financial Group, Japan's largest financial group, agreed a US$9.0 billion investment in Morgan Stanley in a vital boost to confidence in the ailing bank.
In late afternoon European trade, Frankfurt's stock market was up a huge 7.97 per cent and Paris soared 7.38 per cent. London won 5.27 per cent, Madrid rallied 7.88 per cent and Zurich rocketed 8.55.
Iceland's Reykjavik stock exchange, which had been expected to reopen on Monday after closing for two days last week, will remain closed until Tuesday.
Hong Kong closed up 10.2 per cent on Monday while Tokyo, Asia's largest stock market, was shut for a public holiday after slumping 24 per cent last week.
Australian shares ended 5.6 per cent higher - rebounding from an 8.3 per cent plummet Friday - after Canberra announced plans at the weekend to guarantee bank deposits.
In a bid to shore up the market Australia's central bank also pumped 2.85 billion dollars (1.9 billion US) into the financial system to ease the grinding liquidity crisis.
New Zealand had a rollercoaster after opening lower, then moving into positive territory but ending the day 0.82 per cent off despite similar government guarantees on bank deposits to Australia.
Seoul bounced 3.8 per cent higher after the exchange was earlier forced to suspend trading temporarily to cool the market. Taiwan closed down 2.15 per cent.
The rosier stocks picture came after markets around the world saw some of their worst losses in years last week, as terrified investors fled shares in a worldwide collapse of confidence that triggered more panic selling.
The Saudi stock market, the largest in the Arab world, strongly rebounded Monday, closing up 9.5 per cent, above the 6,000-point mark, after hitting a four-year low two days ago. -- AFP
SHANGHAI Chinese share prices closed up 3.65 per cent on Monday as financial companies and property developers rebounded, erasing early losses, dealers said.
The benchmark Shanghai Composite Index, which covers A and B shares, was up 73.00 points at 2,073.57 on turnover of 41.9 billion yuan (S$8.9 billion).
The Shanghai A-share index added 76.63 points, or 3.65 per cent, to 2,177.92 points on turnover of 41.8 billion yuan, while the Shenzhen A-share index was up 10.24 points, or 1.83 percent, at 568.58 on turnover of 15.6 billion yuan.
HONG KONG Hong Kong share prices closed up 10.2 per cent on Monday, as bargain hunters returned to the fray following international moves to firm up the struggling banking system, dealers said.
The benchmark Hang Seng Index ended the session up 1,515.29 points at 16,312.16 after trading between 14,754.64 and 16,376.42. Turnover was 72.59 billion Hong Kong dollars (S$13.7 billion).
The surge followed rises across Asian markets on concerted efforts by international governments and central banks to ease the credit crisis that has devastated confidence in the global banking system.
After a slow morning with some investors picking off shares in Chinese financials and oil refiners that had fallen most in recent sessions, the market racked up the majority of its gains in an aggressive afternoon session.
The trigger appeared to be positive news from the British banking sector, where lender Barclays said it would raise capital without government assistance.
Traders took that as a glimmer of hope in the global credit crunch that has hammered markets lately, though they said the prospects for more near-term gains in Hong Kong seem limited.
The Hang Seng fell 16 per cent, or 2,886 points, last week.
'There are no signs of a turn in the market trend for now with more (global) banks likely to go bankrupt amid the prevailing global financial crisis,' Mr Castor Pang, a strategist with Sun Hung Kai Financial, told Dow Jones Newswires.
Mr Ben Kwong, associate director of KGI Asia, said he expected the Hang Seng Index to trade within a wide range of 14,400-17,000 this week.
'Investors took a breather, as some central banks took some action over the weekend... but I expect Hong Kong stocks to remain very volatile in the near future,' he told Dow Jones Newswires.
Local property developers soared on bargain hunting. Sun Hung Kai Properties rose 14 percent to 66.40 dollars, having dropped 25 per cent between September 30 and Friday.
Henderson Land jumped 16 per cent to 27.75, after falling 29 per cent over the same period. Hang Lung Properties was the day's biggest blue-chip gainer with a 20 per cent leap to 16.76, having dropped 22 per cent so far this month.
TOKYO
Japanese financial markets were closed on Monday for Health and Sports Day, a national holiday.
The markets will re-open on Tuesday. -- AP, AFP, BERNAMA, THOMSON REUTERS
