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| Global stock markets close higher | |
| (about 1 hour later) | |
| Stock markets around the world climbed on Tuesday after five days of losses, but analysts warned that volatility remains a concern. | |
| All US indexes rose. The Dow Jones Industrial Average ended 1.3% up while the Standard & Poor's 500 rose 1.5% and the Nasdaq gained 1.9%. | |
| The climbs echoed rises in Europe and Asia, and come a week after events in China triggered world stocks to slide. | |
| But analysts were cautious about reading too much into the upturn. | |
| 'Trepidation' | |
| "I don't think we should get too used to seeing all this green," said Jay Suskind, head trader at Ryan Beck & Co following the upturn. | |
| "This market feels to me like it doesn't have legs, there just doesn't seem to be that euphoria out there. There is still trepidation." | |
| The benchmark Dow Jones managed to recover about a quarter of its losses seen over the past week, after a global rout prompted by a 9% market fall in China last week. | |
| Analysts are concerned that a broader correction in the markets could still take place. | |
| Tuesday's market rise came even as US economic data signalled the world's largest economy was slowing. | |
| The Labor Department showed lower than expected productivity for the last three months of 2006, while the Commerce Department figures revealed a sharper-than-forecast drop in factory orders for January. | |
| 'Damage done' | 'Damage done' |
| London's FTSE 100 index had ended 1.3% up, while Germany's Dax added 0.9% and France's Cac closed 1% up. | |
| Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around David BrownChief economist, Bear Stearns | Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around David BrownChief economist, Bear Stearns |
| "Markets are still not out of the woods yet," said David Brown, chief economist with Bear Stearns, in a report. | "Markets are still not out of the woods yet," said David Brown, chief economist with Bear Stearns, in a report. |
| "Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around." | "Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around." |
| US economic data released on Tuesday showed factory orders had slowed in January, with durable goods orders seeing their biggest drop in more than six years. | US economic data released on Tuesday showed factory orders had slowed in January, with durable goods orders seeing their biggest drop in more than six years. |
| Other data showed US productivity was down in the last three months of 2006. | Other data showed US productivity was down in the last three months of 2006. |
| Together both sets of data showed the world's biggest economy was slowing, fuelling fears over a wider contraction. | Together both sets of data showed the world's biggest economy was slowing, fuelling fears over a wider contraction. |
| Rebound | Rebound |
| By mid-afternoon the benchmark US Dow Jones had added 0.9% or 107 points to 12,157.8 while the Nasdaq climbed 1.24% to 2,369.67. | By mid-afternoon the benchmark US Dow Jones had added 0.9% or 107 points to 12,157.8 while the Nasdaq climbed 1.24% to 2,369.67. |
| Earlier on Tuesday, Japan's Nikkei index, which had lost 8% of its value in the past five sessions, climbed 1.2%, while the Bombay Stock Exchange closed 2.3% higher at 12,697. | Earlier on Tuesday, Japan's Nikkei index, which had lost 8% of its value in the past five sessions, climbed 1.2%, while the Bombay Stock Exchange closed 2.3% higher at 12,697. |
| Analysts, however, had cautioned against reading too much into the rally. | Analysts, however, had cautioned against reading too much into the rally. |
| "I believe it's a recovery bounce," said Andre Bakhos, president of Princeton Financial Group in New Jersey. | "I believe it's a recovery bounce," said Andre Bakhos, president of Princeton Financial Group in New Jersey. |
| "The hope is that it holds and a bottom can be built from it. But a lot of damage has been done, and it's like expecting an open-heart surgery patient to play tennis the next day." | "The hope is that it holds and a bottom can be built from it. But a lot of damage has been done, and it's like expecting an open-heart surgery patient to play tennis the next day." |
| Hong Kong's Hang Seng index climbed 2.1%, while the main indexes in Australia and China put on 2%. | Hong Kong's Hang Seng index climbed 2.1%, while the main indexes in Australia and China put on 2%. |
| Overvalued? | Overvalued? |
| Equity markets have suffered heavy losses in recent days, after investors dumped stocks amid concerns that they were overvalued and that economic growth could slow. | Equity markets have suffered heavy losses in recent days, after investors dumped stocks amid concerns that they were overvalued and that economic growth could slow. |
| The current stock slump was triggered last week by the biggest drop on China's market in a decade. | The current stock slump was triggered last week by the biggest drop on China's market in a decade. |
| That fed into fears about the state of the US economy, at a time when many investors were questioning whether share prices had risen too far too quickly. | That fed into fears about the state of the US economy, at a time when many investors were questioning whether share prices had risen too far too quickly. |
| Many of the world's top indexes and shares had climbed to levels not seen since the dotcom bubble burst in 2000. | Many of the world's top indexes and shares had climbed to levels not seen since the dotcom bubble burst in 2000. |