US stocks could extend their rally this week, with the Dow reaching the 10,000 mark, should the Fed’s meeting mid-week and the flow of economic data, support the view the economy is recovering from recession.
They will ignore a sharp fall Friday on the Chinese markets as renewed doubts emerged on the strength of bank lending, which has powered the country’s economic rebound.
The Shanghai Composite fell 3.2% and the Shenzhen market was off 4% and Hong Kong’s Hang Seng Index fell 0.7%.
But that weakness will be ignored as the new government in Japan takes power, as the flow of data will probably add to the belief that the US economy is out of the woods and the fears of a year ago will fade further into the distant past.
Despite all those reminders that September is a month when investors generally lose money in the market, this September has proved to be a big exception to the rule.
Nasdaq has rallied 6.2%, the S&P 500 is up 4.7% and the Dow has jumped 7.3% since September 2.
The Dow rose 36.28 points, or 0.4%, Friday to reach a new 11-month high of 9820.20.
Nasdaq added 6.11 points, or 0.3%, to 2132.86 while the S&P 500 index added 2.81 points, or 0.3%, to 1068.30 for its ninth rise in 11 sessions.
All the three indexes were up more than 2% over the week.
For the week, Japanese and Chinese stocks declined, while Australian, Hong Kong, South Korean and Taiwanese shares posted gains; Indian shares advanced for a second straight week.
Australia’s S&P/ASX 200 finished 0.5% lower, but South Korea’s Kospi and Taiwan’s Taiex rose 0.3% and 0.7%, respectively, ending at fresh closing highs for 2009.
In Sydney, the ASX200 index was down 21.7 points, or 0.5%, at 4693.2, but still managed to chalk up a rise of 2.1% for the week.
The All Ordinaries fell 20.3 points, or 0.4%, to 4693.7 and finished with a similar weekly gain.
The local market is up around 50% since March and the US market is up around 45% (for the S&P 500).
The Japanese market was hit by a fall in the shares of consumer-finance companies after Aiful, the nation’s third largest, said it was preparing to apply for debt-relief procedures.
The Nikkei 225 Average fell 0.7% to 10,370.54.
Trading volumes in Tokyo were low ahead of an extended holiday for the market from Monday to Wednesday of this week.
Aiful shares plunged 27.2%, wiping out more than a quarter of its market value.
Aiful told the market Friday morning that it had been consulting the Japanese Association of Turnaround Professionals as part of efforts to revive its business.
Other consumer-finance firms Promise and Takefuji dropped 0.8% and 9.5% respectively.
Aiful also said it will ask Sumitomo Trust & Banking, Aozora Bank and other lenders to reschedule repayment of loans totaling roughly 280 billion yen (or just over $US3 billion).
The Bank of Japan left interest rates steady at 0.10% after a two-day meeting that ended on Friday.
European shares rose for a third straight session and the tenth time in eleven days.
After gaining 1.4% on Thursday, the Dow Jones Stoxx 600 rose 0.5% to 246.15 on Friday, another fresh 2009 high.
London’s FTSE 100 index rose 0.8% to 5,163.95, the German DAX index climbed 0.5% to 5,731.14 and the French CAC-40 index rose 0.6% to 3,835.27.
Allied Irish Banks jumped 28% after saying it will sell property loans to the country’s so-called bad bank and raise about 2 billion euros ($2.9 billion) in capital.
Bank of Ireland jumped 20%. Together they helped Ireland’s market to finish up 6% on the day
That was after the Government’s National Asset Management Agency announced it will buy loans with a combined book value of 40 billion euros from the two banks as the government seeks to purge them of toxic assets.
Allied Irish said it may tap new and existing investors for fresh capital as well as selling some assets to raise the 2 billion euros.
National indexes finished higher in all 18 western European markets except Iceland.
London’s FTSE 100 jumped 3.2% and Germany’s DAX added 1.4%. France’s CAC 40 rose 2.5% from Monday to Friday.
