While you were sleeping: Stocks embrace budget deal

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

Equity markets on both sides of the Atlantic rallied on the first day of trading in 2013, buoyed by a US budget agreement that eliminated tax increases that might have tipped the world's No 1 economy into recession.

In afternoon trading in New York, the Dow Jones Industrial Average gained 1.7%, the S&P 500 Index climbed 1.7%, and the Nasdaq Composite Index rallied 2.2%.

"We're re-valuing the market based on what's closer to the underlying economy and most of the economic reports have been pretty good," James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, told Bloomberg News.

Indeed, a report showed that manufacturing in the US increased more than expected in December. The Institute for Supply Management's factory index climbed to 50.7 from 49.5 in November.

Markit's US Manufacturing Purchasing Managers Index rose to 54.0 last month from 52.8 in November.

"With recent indications that growth is also picking up in other key economies around the world, notably in emerging markets such as China and Brazil, and that the euro zone's economic crisis is easing, US companies should benefit as stronger demand lifts exports in early 2013," Markit chief economist Chris Williamson said.

To be sure, Commerce Department data showed that spending on US construction projects suffered a surprise decline in November.

Bank shares advanced. US regulators led by the Office of the Comptroller of the Currency will replace a largely fruitless effort to find victims of botched foreclosures at the 14 biggest mortgage servicers with flat penalties, Bloomberg reported, citing five people briefed on the talks.

Bank of America, Wells Fargo, JP Morgan Chase and Citigroup are among servicers that may make concessions totaling about $US$0 billion, Bloomberg reported.

Shares of Bank of America gained 3.3%, Wells Fargo rose 2% and JPMorgan Chase advanced 1.6%, while those of Citigroup were up 3.6%.

Meanwhile, shares of Zipcar soared, last up 48.3%, after Avis Budget Group said it would buy the company for about $US500 million in cash. Shares of Avis also gained, last up 4.7%.

The US budget deal also buoyed stock markets in Europe, even as Markit data showed eurozone manufacturing output contracted more than initially estimated in December.

The Stoxx 600 Index finished the day with a 2% advance from the previous close on December 31. Benchmark stock indexes in London and Frankfurt also rose, each gaining 2.2%, while Paris climbed 2.6%.

BusinessDesk


This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7594 0.0000 0.00%
AUD 0.9719 0.0000 0.00%
EUR 0.6980 0.0000 0.00%
GBP 0.5015 0.0000 0.00%
HKD 5.8944 0.0000 0.00%
JPY 90.3750 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1179.0 -14.680 2015-04-24T00:
Oil Brent 65.3 1.460 2015-04-24T00:
Oil Nymex 57.1 -0.480 2015-04-24T00:
Silver Index 15.6 -0.190 2015-04-24T00:

Indices

Symbol Open High Last %
NZX 50 5757.9 5776.4 5757.9 0.13%
NASDAQ 5096.3 5100.4 5056.1 0.71%
DAX 11783.6 11881.0 11723.6 0.74%
DJI 18056.4 18108.9 18058.7 0.12%
FTSE 7053.7 7102.6 7053.7 0.24%
HKSE 27978.4 28089.4 27827.7 0.84%
NI225 20142.5 20142.5 20187.7 -0.83%