90 seconds at 9 am: NZ$ jumps to 77 USc as stock markets rally on hopes for concerted central bank intervention; ECB holds at 1% and rejects talk of new LTRO

Here's my summary of the key news overnight in 90 seconds at 9 am, including news stock market investors cheered hopes that central banks would intervene shortly to try to stimulate the European and US economies again and stave off a Euro-zone financial meltdown.

The Dow rose 286 points or 2.4% overnight and European stocks rose the same amount on hopes the central bank cavalry is galloping over the horizon. It also welcomed talk that European officials were working on a Spanish bank rescue. See more here at Reuters.

A Wall St Journal report that the US Federal Reserve was considering more stimulatory measures after weak US jobs growth and signs of deepening Euro-zone financial stress was the catalyst.

However a close reading of the report from renowned Fed-watching journalist Jon Hilsenrath suggests strong divisions within the US Federal Reserve and that a decision for either a third round of quantitative easing, known as QE III, or an extension of the 'Operation Twist' long bond buying programme is no sure thing in the Fed's meeting scheduled for June 19 and 20. We'll get more detail from the bearded horse's mouth tonight when Federal Reserve Chairman Ben Bernanke testifies before Congress.

Markets also took heart from comments by the European Central Bank's President Mario Draghi that the bank 'stands ready to act'.

The trouble was it didn't act overnight. The ECB held its official cash rate at 1% and Draghi rejected suggestions the ECB could reopen its Long Term Refinancing Operation (LTRO) to lend unlimited amounts of 3 year loans to banks.

“I don’t think it would be right for the ECB to fill other institutions’ lack of action,” he said, Bloomberg reported.

Meanwhile, German industrial output slowed more than expected and Spanish factory production slumped by the most in two years. See more here at Bloomberg.

Also, in another sign of the times, Monsanto announced plans to spend some of a record cash pile on buying back US$1 billion of shares as its profits strengthened. See more here at Bloomberg.

One of the problems in the global economy is the growing phenomenon of corporate hoarding as cashed up companies with strong profits remain reluctant to invest to create new jobs and output. Instead, that cash is being invested in government bonds or returned to shareholders, who are in turn stashing it in government bonds rather than reinvesting it or spending it.

However, all this overnight appetite for risk saw the New Zealand dollar rose to just over 77 US c in morning trade. It has risen almost 2 cents this week on hopes for central bank intervention and the prospect of more money printing in America and Europe. The Australian dollar has also strengthened 2 US cents to over 99 USc, boosted by much better than expected Australian first quarter GDP growth figures yesterday.