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Shares rise as confidence returns Recession fears hit Wall Street
(about 2 hours later)
Stock markets worldwide have forged higher, as investors bet that state action to strengthen the banking system will ease the credit crisis. Fears the global economy may not be able to avoid a recession pushed US share prices lower, despite a $250bn government bank rescue plan.
In Europe, Germany's Dax ended up 2.7%, while the UK's FTSE added 3.2%. In New York, the Dow Jones rose 4%, before slipping 2.49%, amid profit taking. The Dow Jones index ended down 0.82% as investors turned their attention to the worsening economic outlook.
The US has unveiled details of a plan to take stakes in banks, following steps by the UK and European leaders. While bank shares were largely higher because of the US Treasury rescue plan, technology stocks fell.
Traders say Wall Street is expected to be nervous in the weeks ahead because of economic worries.
Among financial stocks, Morgan Stanley rose 21.2%, Bank of America was up 16.4%, Citigroup soared 18.2% and Wells Fargo rose 10.2%.
Earnings worries
But in the technology sector, profit worries drove chipmaker Intel down 6.2%.
Intel then rose modestly in after-hours trading as it reported a 12% rise in its third quarter earnings.
Earlier stock markets worldwide rose, as investors bet that state action to strengthen the banking system will ease the credit crisis.
In Europe, Germany's Dax ended up 2.7%, while the UK's FTSE added 3.2%.
Investors are more confident that a financial meltdown has been averted.Investors are more confident that a financial meltdown has been averted.
FTSE 100 INDEX: 14 October 2008*All Times GMT
The Dow Jones was up 93 points at 9,481 by late morning in New York, although by mid-afternoon, the index was trading down 234 points, or 2.49%, at 9,154.
Analysts said profit-taking started emerging in the market following Monday's 11% rise in the index.Analysts said profit-taking started emerging in the market following Monday's 11% rise in the index.
The Dax closed up 137 points to 5,199, while the FTSE added the same amount to 4,394.
Rebound
Investors worldwide welcomed the fresh moves to deal with the financial crisis.Investors worldwide welcomed the fresh moves to deal with the financial crisis.
If HM Treasury were the corporate finance department of one of those battered investment banks that are now being rescued, it would be collecting a very fat fee Robert Peston, BBC business editor Read Robert's blogUS unveils $250bn banking rescue If HM Treasury were the corporate finance department of one of those battered investment banks that are now being rescued, it would be collecting a very fat fee Robert Peston, BBC business editor Read Robert's blogUS unveils $250bn banking rescue
In Japan, the Nikkei 225 index ended up 14.2% at 9,447.57 points - its biggest one-day gain to date - as it caught up with gains elsewhere after a public holiday on Monday. In Japan, the Nikkei-225 index ended up 14.2% at 9,447.57 points - its biggest one-day gain to date - as it caught up with gains elsewhere after a public holiday on Monday.
Hong Kong's Hang Seng index ended up 520.4 points, or 3.2%, at 16,832.56. South Korea's index finished the day 6.14% higher.Hong Kong's Hang Seng index ended up 520.4 points, or 3.2%, at 16,832.56. South Korea's index finished the day 6.14% higher.
In India, the benchmark Sensex closed up 174.31 points, or 1.54% percent, at 11,483 points. In India, the benchmark Sensex closed up 174.31 points, or 1.54%, at 11,483 points.
"There's relief that banks probably won't go bankrupt thanks to the capital injection plans," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments."There's relief that banks probably won't go bankrupt thanks to the capital injection plans," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"But after rebounding to some extent, we will inevitably enter a phase of thinking about how the steps will actually impact the global economy.""But after rebounding to some extent, we will inevitably enter a phase of thinking about how the steps will actually impact the global economy."
Japan said it was considering pumping taxpayers' money into regional banks to make sure small firms can get loans.Japan said it was considering pumping taxpayers' money into regional banks to make sure small firms can get loans.
Rescue plansRescue plans
The US government has announced a $250bn (£143bn) plan to purchase stakes in a wide variety of banks in an effort to restore confidence in the sector.The US government has announced a $250bn (£143bn) plan to purchase stakes in a wide variety of banks in an effort to restore confidence in the sector.
President George W Bush said the move would help to return stability to the US banking sector and ultimately help preserve free markets.President George W Bush said the move would help to return stability to the US banking sector and ultimately help preserve free markets.
US federal authorities will also temporarily insure most new debt issued by US banks and expand deposit insurance. DOW JONES INDUSTRIAL AVERAGE: 14 October 2008*All Times GMT US federal authorities will also temporarily insure most new debt issued by US banks and expand deposit insurance.
DOW JONES INDUSTRIAL AVERAGE: 14 October 2008*All Times GMT
The US move follows similar steps taken by the UK government, which on Monday said it would inject up to £37bn of taxpayers cash into Royal Bank of Scotland, Lloyds TSB and HBOS.The US move follows similar steps taken by the UK government, which on Monday said it would inject up to £37bn of taxpayers cash into Royal Bank of Scotland, Lloyds TSB and HBOS.
Nobel prize-winning economist Joseph Stiglitz assesses the situation
Likewise, European governments have said they are allocating more than 1 trillion euros to protect the continent's banks through guarantees and other emergency measures.Likewise, European governments have said they are allocating more than 1 trillion euros to protect the continent's banks through guarantees and other emergency measures.
Nobel prize-winning economist Joseph Stiglitz assesses the situation
BBC business editor Robert Peston said the US and eurozone plans were variations on the template launched a week ago by the UK government despite reservations expressed by other leaders.BBC business editor Robert Peston said the US and eurozone plans were variations on the template launched a week ago by the UK government despite reservations expressed by other leaders.
"If HM Treasury were the corporate finance department of one of those battered investment banks that are now being rescued, it would be collecting a very fat fee," he said."If HM Treasury were the corporate finance department of one of those battered investment banks that are now being rescued, it would be collecting a very fat fee," he said.
Australian actionAustralian action
Australia's main share index ended the day up 3.7% after Australian Prime Minister Kevin Rudd announced a 10.4bn Australian dollar ($7.3bn) economic stimulus package.Australia's main share index ended the day up 3.7% after Australian Prime Minister Kevin Rudd announced a 10.4bn Australian dollar ($7.3bn) economic stimulus package.
It will allow for one-off payments to the country's low-wage earners and pensioners, and follows earlier announcements of guarantees of bank deposits for three years.It will allow for one-off payments to the country's low-wage earners and pensioners, and follows earlier announcements of guarantees of bank deposits for three years.
Trading has resumed on the Icelandic stock exchange for the first time since its suspension last Thursday.Trading has resumed on the Icelandic stock exchange for the first time since its suspension last Thursday.
The main share index immediately fell 76%, but officials said this was a statistical anomaly caused by trading in financial firms remaining suspended.The main share index immediately fell 76%, but officials said this was a statistical anomaly caused by trading in financial firms remaining suspended.
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