US and European stock markets will be looking for more gains in coming days after the strongest bounce for weeks last week.
Most markets had goodish gains Friday, with the US in a half day’s trading mode after Thanksgiving.
Almost all markets had their best week for some time, continuing the string of incredible surges and slumps that have come to characterise this bear market.
But Wall Street may struggle to build on these gains given the doubts about the retail spending level in the important festive season sales that started Friday night, our time, and the crucial US unemployment figures Friday.
But interest rate cuts around the world will be a major positive.
Wall Street ended the holiday-shortened week in the black, ending a mid-month losing streak as investors were encouraged by the government’s bailout of Citigroup and then the moves by the Fed and US Treasury to provide more than $US600 billion to support mortgage and credit card and other consumer markets. It will basically buy and finance home loans, car loans and credit cards for a while.
The Standard & Poor’s 500 Index had its best week since at least 1980 – rising 12%.
That reversed the previous week, when the S&P booked its lowest close since 1997. For the four-day week, the Dow Jones industrial average rose 9.7% and Nasdaq jumped 10.9%.
Still, big losses among financial and automaker shares made November among the worst months for Wall Street since the October 1987 stock market crash. The Dow fell 5.3%, the S&P 500 lost a considerable 7.5% and the Nasdaq lost 10.8%.
The yield on the US Treasury 10-year bond fell 0.31% to 2.93%. It touched 2.90% on Friday, the lowest since the Federal Reserve’s daily records on the note began in 1962, and since 1958 on a monthly basis.
The 30-year bond’s yield tumbled 0.27% to 3.44%. It touched 3.43% on Friday, the lowest since regular sales of the security started in 1977.
At these levels the huge US bond market is signalling an intense recession next year and no inflation.
In fact the chances of deflation in the middle months of 2009 are very real as this year’s huge oil price rises from March to July fall out of comparisons.
Australian markets could be a touch firmer Monday after a 15 point rise on the Share Price Index Saturday morning. The Aussie dollar closed around 65.50 USc.
The ASX 200 rose 9.54% last week, but was off 6.8% for the month, one of its worst performances since 1992.
The All Ordinaries fell 7.78% for the month after an 8.44% rise for the week, the biggest weekly rise in 28 years. Both markets had hit four and a half year lows the previous week on November 20.
Analysts said November started strongly: it was up 10% in the first week then plunged to lose 25% in value to bottom 15% down around November 20/21. It then bounced over the last five and a half trading days.
In Europe the FTSEurofirst 300 index of top European shares closed 1.1% higher on Friday for a 13% gain over the week. It fell 7% for the month, the ninth month in a row it has lost ground.
The other major European index, the Dow Jones Stoxx 600 jumped 13% over the week, the biggest gain since January 1987. It was down 7.1% in November.
In London the FTSE 100 index rose 1.46%, ending one of its best weekly showings ever. It rose 13.41%, over the week.
In Paris the CAC 40 added 0.38% on Friday and 13.24% over the week.
Earlier in Asia, Tokyo closed up 1.66%, Hong Kong 2.5%, Seoul 1.2% and Sydney was up 4.3%.
The MSCI Asian Pacific Index rose 6.78%, the second best gain since this year, surpassed only by a 6.88% rally at the end of October, when central banks from Japan to Taiwan lowered borrowing costs.
Tokyo’s Nikkei rose 7.6% over the week. Hong Kong’s Hang Seng jumped 9.7%.
Shanghai however closed down 2.44% on Friday after the big rise the day before on the 1.08% cut in official interest rates.
The CSI 300 Index which tracks Yuan-denominated A shares listed on China’s two exchanges, eased 2.2% on Friday. Unlike other major indexes, it fell last week, losing 4.7% in value and is off 66% so far this year.
