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New York - Global stocks and oil prices rebounded on Wednesday on hopeful signs that authorities are moving forward to prop up Europe’s ailing banking sector and after reassuring US economic data
European finance ministers meeting in Luxembourg late on Tuesday agreed to examine a way to beef up banks’ balance sheets and prevent a full-blown financial crisis.
Risk aversion eased further after better-than-expected data on the US services sector and private sector business activity helped offset concerns about the Greek debt crisis and data in Europe that suggested the region is sliding into recession.
European stocks gained more than 3%, pushed higher by banking shares, and Brent crude bounced more than 2% to top $102 a barrel.
European shares rose after tumbling nearly 5% in the past three sessions. The benchmark S&P 500 index in the United States had fallen 10% over the past six sessions, but had staged a sharp rebound late on Tuesday after earlier marking a fall into bear territory.
The postive sentiment boosted local stocks with the JSE All Share [JSE:J203] index up 0.99% at the close and the rand at R8.04/$ from R8.26 at the JSE's close on Tuesday.
At the close, London's FTSE 100 index was up 3.2%. The index had shed a similar amount over the previous two sessions.
The FTSEurofirst 300 index of top European shares provisionally closed up 3.1%. MSCI’s all-country world index rose 1.3%
“The market is getting a little more confident that policy makers are more serious about tackling the problems,” said Richard Batty, strategist at Standard Life Investments, which has $245 billion of assets under management.
Batty added although it was “helpful to see a road map” that could give investors a clearer expectation of what might be ahead, he was skeptical until he saw a “concrete plan in place.”
Shares of Belgian-French financial group Dexia rose 1.3% in volume more than three-fold its 90-day daily average after France and Belgium prepared a rescue plan for the bank.
Brent crude rose $2.31 to $102.10 a barrel, while US crude was up $2.78 at $78.45 a barrel.
Surveys that showed private sector business activity shrank in the eurozone for the first time in two years last month as new orders dried up kept enthusiasm among many investors in check.
Charles Lieberman, chief investment officer of Advisers Capital Management, LLC in Hasbrouck Heights, New Jersey, said valuations suggest US stocks, which are trading at 10.4 times forward earnings, are cheap. But Europe is still a concern.
“There remain questions about how it will all be resolved, and it is by no means certain that the resolution will come in a responsible way that won’t cause market turmoil,” he said.
Wall Street was up at the opening.
The dollar extended gains versus the yen to hit a session peak, and the euro fell, weighed by nagging worries over a Greek default even after a pledge by policy-makers to strengthen European banks.
A downgrade of Italian sovereign debt by ratings agency Moody’s highlighted the funding difficulties facing the eurozone’s third-biggest economy. France and Belgium were forced to help Dexia SA in the first state rescue of a European bank in the crisis.
“Slightly better employment data would signal risk preference but a lack of progress in any meaningful way on resolving Greece and the debt crisis in general is keeping risk at bay,” said John McCarthy, director of foreign exchange at ING Capital Markets in New York. “A downgrade of Italy has brought everyone back to reality.”
The IMF could invest in Spanish or Italian bonds in the secondary or primary market alongside the euro zone bailout fund, if needed, to help boost investor confidence in the debt, the IMF’s Europe head, Antonio Borges, said.
European finance ministers meeting in Luxembourg late on Tuesday agreed to examine a way to beef up banks’ balance sheets and prevent a full-blown financial crisis.
Risk aversion eased further after better-than-expected data on the US services sector and private sector business activity helped offset concerns about the Greek debt crisis and data in Europe that suggested the region is sliding into recession.
European stocks gained more than 3%, pushed higher by banking shares, and Brent crude bounced more than 2% to top $102 a barrel.
European shares rose after tumbling nearly 5% in the past three sessions. The benchmark S&P 500 index in the United States had fallen 10% over the past six sessions, but had staged a sharp rebound late on Tuesday after earlier marking a fall into bear territory.
The postive sentiment boosted local stocks with the JSE All Share [JSE:J203] index up 0.99% at the close and the rand at R8.04/$ from R8.26 at the JSE's close on Tuesday.
At the close, London's FTSE 100 index was up 3.2%. The index had shed a similar amount over the previous two sessions.
The FTSEurofirst 300 index of top European shares provisionally closed up 3.1%. MSCI’s all-country world index rose 1.3%
“The market is getting a little more confident that policy makers are more serious about tackling the problems,” said Richard Batty, strategist at Standard Life Investments, which has $245 billion of assets under management.
Batty added although it was “helpful to see a road map” that could give investors a clearer expectation of what might be ahead, he was skeptical until he saw a “concrete plan in place.”
Shares of Belgian-French financial group Dexia rose 1.3% in volume more than three-fold its 90-day daily average after France and Belgium prepared a rescue plan for the bank.
Brent crude rose $2.31 to $102.10 a barrel, while US crude was up $2.78 at $78.45 a barrel.
Surveys that showed private sector business activity shrank in the eurozone for the first time in two years last month as new orders dried up kept enthusiasm among many investors in check.
Charles Lieberman, chief investment officer of Advisers Capital Management, LLC in Hasbrouck Heights, New Jersey, said valuations suggest US stocks, which are trading at 10.4 times forward earnings, are cheap. But Europe is still a concern.
“There remain questions about how it will all be resolved, and it is by no means certain that the resolution will come in a responsible way that won’t cause market turmoil,” he said.
Wall Street was up at the opening.
The dollar extended gains versus the yen to hit a session peak, and the euro fell, weighed by nagging worries over a Greek default even after a pledge by policy-makers to strengthen European banks.
A downgrade of Italian sovereign debt by ratings agency Moody’s highlighted the funding difficulties facing the eurozone’s third-biggest economy. France and Belgium were forced to help Dexia SA in the first state rescue of a European bank in the crisis.
“Slightly better employment data would signal risk preference but a lack of progress in any meaningful way on resolving Greece and the debt crisis in general is keeping risk at bay,” said John McCarthy, director of foreign exchange at ING Capital Markets in New York. “A downgrade of Italy has brought everyone back to reality.”
The IMF could invest in Spanish or Italian bonds in the secondary or primary market alongside the euro zone bailout fund, if needed, to help boost investor confidence in the debt, the IMF’s Europe head, Antonio Borges, said.
