A big end to the week, erasing for the time being, doubts about the strength of the current rebound.
World stockmarkets hit 10-month highs and oil topped $US74 per barrel on Friday:
The causes: a strong 7.2% rise in sales of existing US homes in July, and Federal Reserve Chairman Ben Bernanke’s upbeat outlook for the US economy.
But it was qualified optimism; he again pointed out that the recovery won’t feel like one because of high unemployment and subdued demand.
That saw American markets end the week at new highs for 2009, while European shares had their highest close since early November.
But Asian markets had weakened earlier Friday, despite a small recovery Friday for Chinese markets, which still ended the week off almost 4%.
The US dollar, the yen and US Government bonds fell as investors again moved into riskier assets.
Sales of existing houses rose for a fourth straight month and hit their fastest sales pace in nearly two years.
But analysts pointed out that 31% of the sales were foreclosures, up from around 26% in June.
And also boosting is Government help for home buyers (something like Australia’s first home owners scheme). That ends in around two months.
Mr Bernanke’s comments followed the housing report. He told the Fed conference in Jackson Hole, Wyoming, that "prospects for a return to growth in the near term appear good.
He warned that growth is likely to be slow and unemployment will remain high, but investors weren’t listening, up went prices for the day and the week’s previous doubts were erased.
The Dow finished up 155.91 points, or 1.67%, at 9,505.96; the Standard & Poor’s 500 rose 18.76 points, or 1.86%, to 1,026.13.
Nasdaq jumped 31.68 points, or 1.59%, to 2,020.90.
The S&P 500 and the Nasdaq hit 10-month intraday highs, while the Dow hit its highest level in nine months.
The S&P is now up 51.7% from a 12-year closing low set on March 9.
August car sales and production figures will be strong because of the cash for clunker’s program that ends tonight, our time.
The offers auto buyers discounts of as much as $US4,500 to trade in older cars and trucks (SUVs) for new, more fuel-efficient vehicles.
It has recorded more than 489,000 dealer transactions valued at $US2.04 billion in rebates, according to US Transportation Department data released on Friday.
That will boost car output next months as well, and possibly October as additional models are made to replenish stocks.
The danger is that US car sales will tank in the last quarter because of what’s called the ‘drag-forward’ of demand.
In Europe the FTSEurofirst 300 index rose 2.3%, supported by a greater-than-expected improvement in a euro zone manufacturing and services survey, as well as the US housing figures.
Europe is up nearly 50% since reaching a multi-year low in early March.
The MSCI world equity index jumped 1.64% to its highest level since early October.
The MSCI stock index for emerging markets climbed 1.11%.
The Dow Jones Stoxx 600 Index also rose to its highest level since October.
The Index added 2.7% to 234.85 to be up 49% since March 9.
National markets rose in all 18 western European markets this week. London’s Footsie and Germany’s DAX both climbed 2.9%. France’s CAC 40 advanced 3.5%.
London is up 38% since March, much less than many other markets.
In Australia the market closed flat, with stronger energy shares and positive company earnings reports offset by worries about lower property and health-care stocks.
At the close, the ASX200 was up 3.7 points, or 0.1%, at 4377.5, and the All Ordinaries gained 3.8 points, or 0.1%.
For the week the market fell around 3.6%.
But it will be up around 70 points this morning, judging by a 69 point rise on the sharemarket futures trading on Saturday.
Elsewhere in Asia markets were lower and the MSCI Asia Pacific Index lost 3.2%, slipping from the highest level for the year on the previous Friday, August 14.
The index is up 57% since dropping to the lowest in almost six years on March 9.
Taiwan fell 5.9% over the week, the region’s worst performance.
China’s markets rose 1.9% on Friday to be down 3.8% for the week, better than the larger falls the two previous weeks.
The Shanghai Composite Index had rebounded 4.5% on Thursday, the biggest rise in almost five months after dropping to a two-month low of 2,785.58 Wednesday
In commodities, oil rose to end at a 10-month high on Friday and capped a strong week.
October West Texas crude finished 98 cents at $US73.89 per barrel, the highest settle since October 20.
In London Brent crude settled up 86 cents at $US74.19.
Overall oil rose $US6.38 a barrel last week, or nearly 10%, from the $US67.51 in New York the previous Friday, August 14.
The US dollar weakened, unlike the previous week, on more confident news about the US economy.
Existing home sales for July were stronger, up 7.2% in July from June (but 31% of sales were foreclosures) while Federal Reserve Chairman Ben Bernanke said that the global economy appears to be recovering.
But Mr Bernanke reminded a Fed conference that while the global economy was on the mend, though critical challenges remain and recovery is likely to be sluggish.
While a fall in US stock surprised on Thursday, figures out Friday showed t
