A calmer end to a turbulent week (25-01-2008)

In a choppy but calmer session, Wall Street gained for a second day on Thursday as investors were reassured by economic figures showing that the job market is holding up and the package to boost consumer spending was quickly agreed on. The Dow Jones industrials gained more than 100 points, bringing its two-day gain to more than 400.

Although investors may take some convincing regarding the sustainability of this, there was good news found from the Labor Department in that the number of people seeking unemployment benefits last week fell for a fourth straight week. News that the Fed was not aware of the Societe Générale fraud when it made its dramatic rate cut decision at the beginning of the week may be significant or not when Wall Street opens again as the possibility of a further rate cut next week may be viewed in a different light.

Asian markets, meantime, were delighted with the details of a tax rebate for U.S. consumers announced as part of the U.S. government’s economic stimulus plan, interpreting it as good news for consumer spending by their biggest customer.

The Hang Seng led advances, with property stocks soaring on the expectation that the Fed will continue to cut rates next week. Japanese stocks also rose as exporters such as Toyota and Cannon gained the most in almost six years. Banks also logged massive gains with Mitsubishi UGJ gaining 7.88% to ¥1.040, while Sumitomo added 8.83% to ¥715 and Mizuho Financial soared by 10.89% to ¥509.000.

In early morning trade, European shares were adding to Thursday’s gains, led by M&A news, as the anticipated Scottish & Newcastle and Carlsberg merger was agreed and advancing banks and oil shares with Royal Bank of Scotland up by 2.7 percent, while BP was gaining 2.2 percent as the oil price CLc1 came within a breath of $90 a barrel.

Very early in the morning, around 09:00 GMT, Wall Street futures ranged from 0.57 to 0.70 percent having eased from just above 1 percent earlier.

Source: ISFM