Markets surge on stimulus hopes

European and Asian shares have surged on hopes that new stimulus plans in the US and other countries will revive global economic growth.
In the UK, the benchmark FTSE 100 jumped almost 5%, while the German Dax and France’s Cac 40 rose even higher, up almost 7%.
Earlier, Asian stock markets also rallied. Korea’s Kospi index rose 7.5% to a near four-week high.
Hong Kong’s Hang Seng ended up almost 9%, while Japan’s Nikkei added 5.2%.
Stock markets in India and mainland China also rose.“Despite bad US jobs data [announced on Friday], markets are gaining on a sense that they’ve hit the bottom and expectations for economic stimulus measures being put out by many governments,“ said Hiroake Osakabe at Chibagin Asset Management.
Great expectations
Investors were cheered by plans outlined by US President-elect Barack Obama over the weekend for the biggest infrastructure investment since the creation of an interstate highway in the 1950s, which would create at least 2.5 million new jobs.
Hopes that Congress will soon pass legislation that will save the „big three“ Detroit carmakers from collapse also helped to boost global markets.
This came after a dire session on Friday fuelled by grim US unemployment figures.
BBC business editor Robert Peston said the stock market reaction was „largely emotional“.
„An extraordinary, frightening responsibility is being placed on Obama,“ he said.
„At a time when most would say that globalisation has undermined the power of most elected politicians, there appears to be a widespread belief that one newly elected leader will have near-magical powers.“
Separately, South Korea and India also unveiled measures to help firms and boost their economies and there is also talk that the Chinese government will take further action to spur economic growth.
The UK FTSE rose 197.8 points to 4,247, while Germany’s Dax climbed 304.2 points to 4,685 and France’s Cac added 192.4 points to 3,180.4.
Mining and construction groups and firms that make machinery were the biggest gainers on hopes that they will benefit from increased investment in infrastructure projects.

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