Asian Stocks Rise On U.S. Bank Plan
Asian stock markets extended their rally Tuesday after Wall Street surged on hopes a U.S. plan to rid banks of festering debts at the heart of the financial crisis will revive growth. European markets were mixed in early trade.
Financial firms jumped, Japanese exporters rose on the sliding yen, and
Investors worldwide appeared heartened by the Obama administration's move to clean up as much as $1 trillion in toxic securities and loans weighing down bank balance sheets - a key part of the government's arsenal aimed at restoring consumer and company lending so crucial to economic activity.
"Investors are somewhat upbeat about prospects for this plan having a positive impact on the economy," Hugh Johnson, Chairman and CIO of Johnson Illington Advisors, told CBS News.
Johnson told CBS News that while he doesn't read the messages as it being time to completely shift from a somewhat guarded or defensive portfolio to "an all-out, bull market portfolio, but at least we can start to work our way in that direction."
A dose of better-than-expected news about the other big U.S. economic problem - the housing slump - added to the upbeat mood. Data showing a surprise increase in home sales fostered hopes the hard-hit housing industry might finally be stabilizing.
Asian markets have risen sharply recently, with Japan and Hong Kong's indexes each surging a stunning 20 percent over the last two weeks.
But analysts cautioned investor sentiment, while recovering in the short term, was still fragile. Doubts about the U.S. plans - about how to price the assets and account for losses, among other issues - could smother in the coming days what many believe is still an abridged rally in a longer bearish trend.
"At the end of the day there has been no game changer even if the plan is implemented perfectly. And that's an enormous 'if,"' said Kirby Daley, senior strategist at Newedge Group in Hong Kong.
Indeed, Wall Street was poised to give up some of its gains in trading Tuesday after U.S. futures fell. S&P futures were down 6.9 points, or 0.8 percent, to 810.4.
In Japan, the Nikkei 225 stock average gained 272.77, or 3.3 percent, to 8,488.30, and Hong Kong's Hang Seng index was up 462.92 points, or 3.4 percent, at 13,910.34.
South Korea's Kospi gained 1.9 percent to 1,221.70 as the government announced Tuesday it would plow an extra $20.9 billion into creating new jobs and bolstering the economy as the country's slump worsens. That represents more than twice the extra spending implemented during the 1997-98 Asian economic meltdown.
Elsewhere, Shanghai's index rose 0.6 percent, Australia's stock measure added 0.8 percent and Taiwan's benchmark was up 2.3 percent. India's Sensex traded 1.3 percent higher at 9,542.33.
Early in Europe, Britain's FTSE 100 was down 1.2 percent while Germany's DAX and France's CAC-40 added 0.2 percent.
Among Asia's best performers were financials, which have recovered sharply in recent weeks. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, rose 4.5 percent, while top Australian investment bank Macquarie Group galloped ahead by 5 percent.
Banking giant HSBC jumped 9.8 percent in Hong Kong, catching up with an overnight surge in its London shares as trading in its rights to a new share offering got under way.
A weakening yen benefited Japan's exporters, whose overseas earnings hinge on currency moves. Nikon Corp. added 6.8 percent.
Cheered by news about the banks and housing sector, investors sent stocks surging, and the Dow rose 497.48, or 6.8 percent, to 7,775.86, its highest finish since Feb. 13. The Standard & Poor's 500 index rose 54.38, or 7.1 percent, to 822.92, crossing the psychological milepost of 800.
Oil prices dipped in Asia, with benchmark crude for May delivery down 23 cents at $53.57. The contract rose $1.73 to settle at $53.80 overnight.
In currencies, the dollar rose to 98.45 yen from 97.10 late Monday in New York. The euro fell to $1.3596 from $1.3626.
MMIX, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report