How Big Is The Current Bull Rally In The Bear Market?

Posted by Kris | Monday, April 06, 2009 | | 0 comments »

Global stocks are still posting a strong performance today into the 5th consecutive week. GOLD is dropping from a high of USD1,000. How long is this going to last? Lets wait till the Q2 earnings. There is a lot articles going around that the reason Citigroup and Bank Of America is able to announce that they are profitable in the 1st 2 month of 2009 is that they receive the US bailout money indirectly from AIG as they profited from the hedges on the ailing insurance company.

Investors remained buoyed by last week's apparently united Group of 20 meeting in London and some tentative signs that the severity of the recession in the U.S. may be easing, despite Friday's news that the world's largest economy shed a massive 663,000 jobs in March alone, which took the unemployment rate up to 8.5 percent from 8.1 percent.

In Europe, the FTSE 100 of leading British shares was up 42.60 points, or 1.1 percent, at 4,072.27, while Germany's DAX rose 55.05 points, or 1.3 percent, to 4,440.04. The CAC-40 in France was 37.96 points, or 1.3 percent, higher at 2,996.70.

Earlier in Asia, investors brushed aside news of North Korea's launch of a long-range missile, with Japan's Nikkei 225 stock average closing up 108.09 points, or 1.2 percent, to 8,857.93, and Hong Kong's Hang Seng index ending 452.35, or 3.1 percent, higher at 14,998.04 to lead the region.

"It is probably too early to say, but there is certainly a better appetite for risk than we have seen for some time," said David Buik, senior strategist at BGC Partners.

Despite the improved appetite for risk, investors remain aware that the rally will not probably not run a smooth course as a raft of earnings reports around the world over the coming weeks will make for pretty grim reading and unemployment continues to spike sharply higher.

"Equities are likely to bob around like a cork in a bath for the next three months," said Buik.

For now though, investors appear to think that the raft of measures undertaken by governments and central banks around the world have been a suitable response to the worst financial crisis since the 1930s. Japan's government earlier ordered more than 10 trillion yen ($99 billion) in fresh spending to rescue the world's second-biggest economy from its deepest recession since World War II.

That improved stock market sentiment was evident in the response to HSBC PLC's 12.9 billion pound rights issue. The bank said nearly 97 percent of the shares had been taken in the offer and that the remaider have been sold in the market.

HSBC's share price rose over 5 percent on the news. It success helped other British banking stocks, with Barclays PLC up nearly 6 percent and Lloyds Banking Group PLC, which is majority-owned by the government, up 7 percent.

The rally on Wall Street was expected to continue at the open. Dow futures were up 40 points, or 0.5 percent, at 8,023 while the broader Standard & Poor's 500 futures rose 4.10 points, or 0.5 percent, at 844.70. In New York Friday, the Dow closed at 8,017.59, its highest close since Feb. 9. It's now 22.5 percent above its March trough and in the middle of its biggest four-week rally since 1933.

Elsewhere in Asia, India's Sensex climbed 1.9 percent, Australia's key index gained 0.6 percent and Singapore's stock measure rose 1.3 percent. Markets in mainland China, Thailand and the Philippines were closed for holidays. South Korea's Kospi advanced 1.1 percent to 1,297.85.

Among Asia's best performers was Mazda, which went into overdrive with the Japanese carmaker surging over 10 percent, while electronics maker Panasonic added 2.3. percent.

The market optimism was felt in the oil markets too with oil prices back up above $53 a barrel Monday. Benchmark crude for May delivery rose 61 cents to $53.12 a barrel.

In currencies, the dollar was steady just above 101 yen, while the euro rose to $1.3529 from $1.3483