Stocks advanced amid hope that the Federal Reserve will provide a helping hand and that the talks about the Greek bailout will prove more productive than expected.
The market seemingly shrugged off a surprise downgrade of Italy’s credit rating and the International Monetary Fund’s bleak outlook.
In late trading in New York, the Dow Jones Industrial Average rose 0.96%, the Standard & Poor's 500 Index gained 0.75% and the Nasdaq Composite Index edged 0.17% higher.
In Europe, the benchmark Stoxx 600 Index closed 1.8% stronger.
The Fed, which began a two-day meeting today, is expected to announce tomorrow that it will start replacing short-term Treasuries with long-term bonds, according to the majority of economists surveyed by Bloomberg. The move is known as “Operation Twist,” for its goal to reshape the yield curve.
"Treasuries have stayed near these levels because as an investor, you don’t want to fight the Fed, especially when it’s going to announce something," Larry Milstein, managing director of government and agency debt trading at R.W. Pressprich & Co., told Bloomberg News.
Still, analysts regard any potential support measures as modest.
"These are tinkering measures, not the financial bazooka, so to speak," Carl Riccadonna, senior U.S. economist for Deutsche Bank in New York, told Reuters. "If we get to a period where the employment numbers turn negative - then I think there will be much more agreement on the Open Market Committee that they will have to do something bolder. We're certainly not there yet."
A report showing U.S. housing starts declined more than expected in August underpinned the fact that the word’s largest economy is struggling.
Across the pond, Italy’s credit rating was unexpectedly slashed by Standard & Poor’s by one notch as the credit ratings agency cited poor growth prospects and political instability. S&P cut Italy to A/A-1 from A+/A-1+ and kept its outlook negative.
The downgrade came amid fresh optimism that Greece will secure more funding in its talks with international lenders. At least based on what the Greek finance ministry is saying.
While Italian Prime Minister Silvio Berlusconi said the downgrade didn’t reflect reality, investors and analysts were more concerned about struggles in Italy’s economy, which is much larger than that of Greece.
“Italy is a much bigger deal than Greece," Kathy Lien, director of currency research at GFT in New York, told Reuters.
And the IMF warned the European Union needs to show more progressive action in dealing with its problems. The IMF also warned Europe and the U.S. could slump back into recession.
"There is a wide perception that policymakers are one step behind the action, markets " IMF chief economist Olivier Blanchard told a news conference, according to Reuters. "Europe must get its act together."
(BusinessDesk)
10 Comments
We are lead by the wrong people – sack them !
Spending for: 20 millions – 50 millions – 200 millions – 220 millions for how much longer ? Where is the money ? Where does the money come from for families/ taxpayers - to pay the bills ? Where are the jobs ?
The world powers chewing and stretching the “bazooka” -
http://www.youtube.com/watch?v=yZXRaVBf0pY
yes - and the sweetness is just disappearing, into more stupid decisions, leading into worldwide instability on many fronts and as a bitter consequence the fall of societies. Only revolutionary events will lead into reformation of political/ financial systems.
Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.
Roger - how is "Tambora" and "Anak Ranakah" doing ? I heard a lot of chewing is going on.
First signs ..and it is more to come.
Bank of China has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, sources said yesterday. The Financial Times had reported Siemens withdrew 500 million euros (HK$5.34 billion) from an unknown large French bank two weeks ago,…………….
http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=115367&si…
Natural disasters - costs billions
More than 1 million people in Nagoya have been advised to evacuate because of Roke and almost 80,000 have been ordered to leave due to flood risk, said Katsuya Kobayashi in the city's disaster prevention center.
http://news.businessweek.com/article.asp?documentKey=1376-LRT18P0YHQ0X0…
Within the 30km zone surrounding the Fukushima dai-ichi power plant, there is a certain amount of despair setting in regarding the question of whether or not residents will ever be able to return to their homes. Serious problems remain. “In reactor three, which suffered a meltdown…….
New Zealand's current account deficit widened in the second quarter, as foreigners earned more from their local investments, including insurance companies that incurred earthquake-related losses in the first three months of the year.
http://www.stuff.co.nz/business/industries/5660751/NZ-current-account-gap-widens
The US strongly objects to the Palestinian Authority's plan to seek membership of the UN, and full recognition of its statehood, and is frantically trying to avoid the vote taking place
It is the only nation on earth which does not know and will not declare where its eastern frontier is. Is it the old UN armistice line, the 1967 border so beloved of Abbas and so hated by Netanyahu, or the Palestinian West Bank minus settlements, or the whole of the West Bank?
http://www.independent.co.uk/opinion/commentators/fisk/robert-fisk-why-…
...and then jobs !!
Joblessness is booming in France and worldwide, as economic growth has come to a virtual halt in all regions of the globe, economists say.
When does our government changes it’s course doing election propaganda lying to the public, in stead to inform the people of New Zealand how dire the situation really is ?
..and when does our government and other political parties adopt to the worldwide situation and accept the severity of the situation, plan ahead and react accordantly ?
..nothing !
Are we a bunch of idiots ?
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