While you were sleeping: Optimism lifts global shares

Equities on Wall Street and in Europe advance as the string of good news on the US housing market continues, while optimism grows that a deal to avoid the so-called fiscal cliff and safeguard the world's largest economy will be reached.

Investors welcomed separate reports showing a surprise gain in US home resales in October and a climb in homebuilder sentiment in November.

"The housing market is continuing to improve. It's probably improving more than most economists were projecting earlier this year," Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, told Reuters.

That is good news at a time when US lawmakers are in talks to prevent automatic tax increases and spending cuts from kicking in on January 1. The mood has been optimistic since discussions began late last week.

"I am confident we can get our fiscal situation dealt with," President Barack Obama said yesterday at a news conference in the Thai capital of Bangkok, according to Bloomberg News.

Some argue that the failure to reach an agreement that will prevent the fiscal cliff is a price the US economy cannot afford to pay.

Fitch said falling over the fiscal cliff could trigger a second recession and push the nation's jobless rate above 10%. The ratings agency said it did not expect Congress to allow the tax and spending cuts to kick in, given their "far-reaching effects".

Still, some are rather safe than sorry. Wal-Mart Stores opted to fast-track its planned dividend into late December from early January.

"There are complex fiscal and federal tax rate issues that may not be resolved in the next few weeks, despite the ongoing good faith negotiations between the administration and Congress to resolve details related to the fiscal cliff," Wal-Mart says in a statement.

Earnings also provided good news. Shares of Lowe's Cos gained, last up 6.3% after the company posted quarterly profit that exceeded expectations and lifted its full-year sales forecast.

Meanwhile, Intel said today that chief executive officer Paul Otellini will retire in May.

"They need someone with a strong understanding of the mobile landscape to guide them for the next six to eight years," Patrick Wang, an analyst at Evercore Partners, told Bloomberg. "They'd be in great shape if they were to add significant mobile expertise to that management team."

In afternoon trading in New York, the Dow Jones Industrial Average rose 1.39%, while the S&P 500 Index gained 1.70% and the Nasdaq Composite Index climbed 1.83%.

In Europe, the Stoxx 600 Index ended the day with a 2.2% advance on the previous close. Stocks in Paris, Frankfurt and London also rose, climbing 2.9%, 2.5% and 2.4%, respectively.

Oil prices rose to the highest level in four weeks amid the increasingly escalating conflict in the Middle East. Crude for January delivery was last up 2.8% to $US89.37 a barrel on the New York Mercantile Exchange.

(BusinessDesk)

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1 Comment & Question

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The US Housing market may be improving but once again it is being stimulated by low interest rates and easy credit.

A deal to avoid the fiscal cliff? I believe i read an article recently stating that Barack Obama intends to raise the debt ceiling once again with further raises to be needed down the road. How exactly do they intend to pay for this without cutting spending and reducing taxes???

By printing more and more money they are just creating more and more debt which will never be paid off and the whole time they are just destroying the savings of Americans.

Let's see how their equity and housing markets do when their dollar collapses.

Time to let the free market sort the problems out. Those that are broke go bust and private capital buy up any value that is left. Government needs to get the hell out.

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NZ Market Snapshot

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