IMKB, global markets soar as US debt plan revives appetite for risk
Posted by meb at March 24th, 2009
Turkish markets joined soaring world markets as investors were cheered by the US government’s plan to help banks remove as much as $1 trillion in bad assets from their books. The benchmark index of the İstanbul Stock Exchange (İMKB) rose 755.77 points, or 3.14 percent, in the morning trading session over Friday’s closing level and reached 24,794.66 points.
The highest level reached during morning trade was 24,832.84 points, from where the index subsequently retreated.
Later on Monday, after Today’s Zaman went to print, US Treasury Secretary Timothy Geithner was expected to detail a program that would rely on the government’s $700 billion financial rescue fund, the Federal Reserve and the Federal Deposit Insurance Corp., as well as private investors.
Bank shares saw the biggest trade volume on the İMKB. Stocks in Akbank, 20 percent of which is owned by the US’s now-teetering financial giant Citigroup, were up by nearly 6 percent, fueled by the US’s move to clear the toxic debt. Citigroup’s shares jumped 26.9 percent in early trading on the Frankfurt bourse yesterday. The interest rate on benchmark Treasury bonds was 14.29 percent on Friday evening as trading on the İMKB ended.
The interest was down further yesterday, as low as 14 percent, at the start of trading, and it continued moving even lower.
The director of the foreign currency division of one domestic bank said the US’s plan to remove toxic assets caused revived the appetite for risk among investors, encouraging them to step out from their safe havens. He also said the euro/dollar currency rate may also see a rise in the current environment, perhaps from its current level of 1.37 to as high as 1.4. “The depreciation in the dollar is also fueling expectations of a downward move in the dollar/TL rate,” he said. Bankers say the downward movement in the dollar’s value against the lira will likely continue for some time.
The dollar was selling for TL 1.685 on Friday evening, but in morning trading on Monday it was trading for TL 1.678. The rate dropped even further, to 1.673, later in the first session.
Ahead of Geithner’s announcement of the bank plan on Monday, Dow industrials futures jumped 190, or 2.6 percent, to 7,405. Standard & Poor’s 500 index futures rose 21.40, or 2.8 percent, to 785.50, while NASDAQ 100 index futures rose 29.50, or 2.5 percent, to 1,217.50.
By noon in mainland Europe, Britain’s FTSE 100 climbed 1.4 percent to 3,898.17, Germany’s DAX jumped 1.8 percent to 4,143.15 and France’s CAC 40 advanced 1.5 percent to 2,833.61.
In Asia, the MSCI index of Asia Pacific stocks outside Japan was up 4.3 percent, having hit the highest level since mid-January, supported mostly by the energy, financial and materials sectors. Tokyo’s Nikkei rose 3.4 percent to its highest close since late January, getting the biggest boost from technology shares.
“If the US authorities actually succeed in buying up to $1 trillion of ‘toxic assets,’ it would be considered a significant step by the financial markets. However, the markets will be disappointed if the programs do not move forward due to problems regarding how the assets’ values are measured,” said Mamoru Yamazaki, chief economist with RBS Securities in Tokyo. Hopes that the US Treasury’s bank plan will help revive economic growth lifted crude oil over $52.5 a barrel on the New York Mercantile Exchange. The dollar was mixed against other major currencies, while gold prices fell.
Investors will also be looking to a report from a real estate trade group that is expected to show that sales of existing homes fell slightly last month.
source: Today’s Zaman
Related posts:
