Washington
08 December 2008
Global stock markets are rallying on expectations that coordinated fiscal stimulus measures in Asia, Europe and America will cushion the impact of the economic slowdown.
The rally began late Friday on Wall Street and gained momentum in Asia on Monday. Hong Kong's main market index gained nearly nine percent to a seven-week high and Tokyo was five percent higher. The rally continued in Europe with the main indexes in London and Frankfurt up substantially.
At midday on Wall Street, the Dow Industrials were up 250 points, reaching their highest level since early November.
Global markets have been in a tailspin for the past three months as the 16-month-old financial crisis began to impact global economies. Job losses have been accelerating with half a million jobs lost in the United States during November.
Analysts say the U.S. rally is being spurred by hopes the White House and Congress are close to an agreement on short-term assistance to the beleaguered American car companies. General Motors and Chrysler say that without emergency aid they will run out of money by the end of the month.
Meanwhile, France announced plans for increased government spending and President-elect Barack Obama says he will move quickly on an estimated $500-billion spending program.
At a conference in Washington, the U.S. Treasury housing expert said delinquencies on home mortgages are continuing to rise even where lenders lowered the interest rates charged to borrowers. At the same conference, the vice-chairman of the Federal Reserve, Donald Kohn, says the banking industry is still under immense pressure.
"Large losses taken by financial institutions and investors mostly, but not entirely from mortgage related assets, have increased uncertainty and undermined confidence. These events have caused lenders to greatly tighten lending conditions to households and businesses," he said.
On the commodities markets, oil prices rebounded from the sharp losses of last week when prices fell 20 percent.