Weekend markets: Bernanke speech lifts stocks, gold

Stocks rose sharply as Wall Street drew cheer from Federal Reserve chairman Ben Bernanke, who signalled the state of the economy is not in need of quick stimulus.

It was Wall Street’s first winning week in the past five. Gold futures recovered after its sharp mid-week correction.

In his speech at the annual central bankers’ convention at Jackson Hole, Wyoming, Dr Bernanke said the Federal Open Market Committee would consider its options over two days at its next meeting in late September.

“The Fed has a range of tools that could be used to provide additional monetary stimulus,” Dr Bernanke said. These options were discussed in August and “we will continue to consider these and other pertinent issues...at our meeting in September,” he said.

After falling more than 200 points as the speech was published, the Dow Jones Industrial Average climbed as much as 176 points.

At the close (8am NZ time), the Dow Jones Industrial Average was up 134.72 points, or 1.2%, to 11,284.54, up 4.3% from last Friday's close.

The S&P 500 Index rose 1.5%, to 1176.80, a weekly rise of 4.7%. The Nasdaq Composite Index rose 2.5%, to 2479.85, leaving it with a 5.9% weekly gain.

World markets: Europe falls, Asia mixed
European stock markets ended lower as continued uncertainty over Greece’s bailout hit bank stocks hard.

The Stoxx Europe 600 index dropped 0.7% to end at 225.52, but gained 1.1% for the week.

Germany’s DAX 30 index dropped 0.8% to close at 5537.48, led by banking and insurance stocks. Shares of Commerzbank and reinsurer Munich RE each dropped 2.7%.

Financial stocks also fell heavily in Paris. The CAC 40 index shed 1% to close at 3087.64. The UK’s FTSE 100 index fell 1.18 points, or 0.02%, to 5129.92, as Royal Bank of Scotland Group slumped 5.2%.

Stocks in Hong Kong and Australia fell to lead several Asian markets lower after a roller-coaster ride.

Indexes swung between positive and negative territory during the session, with Hong Kong’s Hang Seng Index finishing down 0.9% at 19,582.88, China’s Shanghai Composite index slipping 0.1% to 2612.19 and Australia’s S&P/ASX 200 index falling 0.3% to 4200.

On the upside, Korea’s Kospi rose 0.8% to 1778.95, Taiwan’s Taiex added 0.5% to 7445.10 and Japan’s Nikkei Stock Average rose 0.3% to 8797.78 after each changed direction a few times.

Commodities: Oil steady, gold recovers
Oil futures finished slightly higher as Dr Bernanke offered a more optimistic view of the US economy and deferred all talk of further steps.

Crude for October delivery tacked on 3USc, or 0.1%, to settle at $US85.37 in New York. It had earlier traded as low as $US82.95 a barrel and as high as $US85.64 a barrel. For the week, oil climbed 3.8%.

Gold futures closed 1.9% higher. Gold for December delivery gained $US34.10 to settle at $US1797.30 an ounce in New York. For the week, gold declined 3%.

The week included a two-day correction that at its peak shaved nearly $US200 off the price, which hit a record on Monday just shy of the $US1900 mark.

Currencies: Dollar falls, euro rises
The US dollar declined after big swings in a volatile session, as traders attempted to interpret what Dr Bernanke’s comments may mean for future easing policies.

The euro turned up to $US1.4483 from as low as $US1.4329 just after the speech and versus $US1.4379 on Thursday. The UK pound strengthened 0.3% to $US1.6341.

For the week, the euro gained 0.6%, adding to the year’s 8.2% rise.

Versus the pound, the dollar declined 0.8% since last Friday, but it’s still up 4.7% this year. It fell to ¥76.71 compared to ¥77.57. For the week, the dollar advanced 0.3% against the yen but is still down 5.4% this year.