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Global stocks surge; Dow past all-time high
March 06, 2013 , 7 : 35 am
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Bullish sentiments: Traders work on the floor of The New York Stock Exchange, yesterday.
The Dow Jones industrial average hit a record high yesterday as major world stock markets rallied after China pledged more government spending to boost economic growth and data showed the U.S. service sector expanding at its fastest pace in a year in February.
Crude oil and copper prices also advanced on China's pledge to deliver economic growth of 7.5 per cent this year in the world's second-largest economy.
On Wall Street, the Dow surpassed the highs seen in 2007, before the financial crisis, breaking the previous intraday record of 14,198.10 set on Oct. 11, 2007.
Analysts said yesterday's advance was linked less to one specific catalyst and more to the same factors that have been driving the rally this year, namely, attractive valuations and liquidity resulting from the U.S. Federal Reserve's easy monetary policies.
"Just because we're testing old highs doesn't necessarily mean the markets are going to capitulate. The underlying fundamentals still remain in place," said Joseph Tanious, global market strategist at JPMorgan Funds in New York.
After the peak in 2007, stock markets crashed as the United States and Europe entered a deep recession. The rebound in U.S. equity markets has been much stronger than in Europe as the United States did not embrace the sharp government austerity measures that have hindered economic growth in Europe, while added liquidity from the Federal Reserve and historically low interest rates have fuelled investors' appetites.
Even though the Dow hit a record high, its euro-zone peer, the blue-chip Euro STOXX 50, still needs to gain more than 70 per cent to reach its June 2007 top.
An MSCI gauge of global equities rose 1.1 per cent and the FTSEurofirst-300 index of top European shares shot up 1.8 per cent.
London's FTSE 100 index of top companies jumped by 1.36 percent to close at 6,431.95 points, Frankfurt's DAX rallied 2.32 percent to a five-year high of 7,870.31 and in Paris the CAC 40 leapt by 2.09 per cent to 3,787.19 points, its highest level since the start of the year.
In the oil market, Brent crude broke a five-day losing streak as the North Sea Brent pipeline remained closed for a third day and investors bet on strong Chinese oil demand. Data showed the U.S. services sector accelerated at its fastest pace in a year in February, further supporting oil.
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March 06 at 10 : 03 am
The sudden leap in the world stock market index is a very promising trend. It straight away tells that besides United States, a balanced Chinese economy is also an influencing factor for the world to remain economically unwavering. China, with its ample resources, is making use of every opportunity at its best to overcome the recession that overlapped the whole world a few years ago. The recent change, however, embraced in the stock market in the US is for sure gives a fresh prospect to investors.
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