Global stocks surge on world stimulus hope
By Manuela Badawy
NEW YORK | Wed Oct 6, 2010
NEW YORK (Reuters) - World stocks surged to a five-month high and the U.S. dollar fell broadly on Tuesday after the Bank of Japan unexpectedly cut interest rates, fueling speculation that other governments will take additional actions to reinvigorate the global economic recovery.
Gold hit yet another record high above $1,340 an ounce, while copper rose to its highest since July 2008 and oil rose to a five-month high as the dollar, driven by investor concern over the outlook for global growth, weakened further.
Risk assets soared on encouraging U.S. services sector data, the BOJ's rate cut and the Reserve Bank of Australia's decision not to raise rates, raising investor hopes that cheap money will flood global economies. The Federal Reserve has suggested it may engage in further quantitative easing unless the U.S. economic outlook improves.
"The thinking today is that the printing of money is going to take place," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
"The short-term impact of that is to drive asset prices higher. We've seen it almost across the board in commodities."
The BOJ's measures -- cutting its overnight rate target to virtually zero and pledging to buy 5 trillion yen ($60 billion) worth of assets -- pushed the Nikkei average .N225 to close 1.5 percent higher. The December futures contract for the Nikkei 225 stock index trading in Chicago rose 280 points to 9,630.
Tokyo's action came after Fed Chairman Ben Bernanke said on Monday that more asset purchases could further ease financial conditions and help the economy.
The euro jumped to its highest since February against the dollar on concerns that further U.S. quantitative easing could undermine dollar strength.
A U.S. equities rally was fueled further by data showing the pace of growth in the U.S. services sector, which accounts for 80 percent of U.S. jobs, accelerated last month more quickly than economists had expected, while hiring also picked up.
The Dow Jones industrial average .DJI closed up 193.45 points, or 1.80 percent, at 10,944.72. The Standard & Poor's 500 Index .SPX rose 23.72 points, or 2.09 percent, to 1,160.75, the highest level since mid-May. The Nasdaq Composite Index .IXIC gained 55.31 points, or 2.36 percent, to 2,399.83.
http://www.reuters.com/article/idUSTRE68S0AQ20101006
Tomorrow, I am going down to BestBuy and purchase that 55" HDTV on my Visa card and stimulate the economy even more! Yippie !!!
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