Stocks Stage Solid Rallies Across Asia and Europe
Foreign stocks rose sharply Monday, setting a positive tone for Wall Street when trading resumes there today, with stocks overseas continuing to benefit from last week’s international push to stem Asia’s economic crisis.
Stocks in Thailand, where the crisis began last summer, jumped 9.8% to lead Monday’s advance. Elsewhere in Asia, Malaysia’s main stock index rose 9%, Singapore’s rose 6%, Indonesia’s rose 6%, the Philippines’ rose 5.7%, and Hong Kong’s rose 5.6%. South Korea’s main stock index was up 1.73% early today after seeing a rise of 6.6% on Monday.
The main stock index in Tokyo rose 1.3% on Monday amid renewed hopes that government stimulus efforts will spur the Japanese economy.
European stocks rose, following the gains Friday in U.S. and Asian equities. Frankfurt’s DAX index rose 2.4%, and London’s FTSE-100 rose 0.2%.
The battered markets of Asia began rebounding early last week as U.S. and International Monetary Fund officials scurried around the region in an effort to extract promises to carry out tough economic reforms being demanded as part of an international bailout effort.
The IMF has arranged more than $100 billion for South Korea, Indonesia and Thailand--nations hard hit by a steep slide in local currencies and stocks since last July.
If the strong showing overseas continues today, U.S. markets may benefit. The U.S. markets were closed Monday in Wall Street’s first full-day observance of the federal holiday honoring civil rights leader the Rev. Martin Luther King Jr.
U.S. stocks had posted some sizable gains on Friday, with the Dow Jones industrial average finishing 61.78 points higher, at 7,753.55. Aside from Monday’s market gains, there were no major developments in the Asian economic situation. On Wednesday, a South Korean delegation is scheduled to meet with leading banks in New York to discuss ways to alleviate a short-term debt crunch. South Korea owes about $92 billion in loan payments this year, including $35 billion due in the weeks ahead.
More pivotal to Wall Street’s fortunes this week may be the profit reports due from major American companies with considerable exposure to Asian markets, including Chase Manhattan and Citicorp, which will report their results today. As for the optimism in South Korea, “investors are more selectively buying stocks now after a widespread buying spree for a week,” said Park Yong Shik, an analyst at Daewoo Securities, the nation’s largest brokerage house. “Chip makers, which are expected to benefit from rising chip prices, continue to be picked up.”
Standard & Poor’s revised its creditwatch implications to “developing” from “negative” on the foreign-currency ratings of Korea Electric Power, Korea Telecom, Pohang Iron & Steel and SK Telecom.
In Europe, Britain’s FTSE-100 index of leading stocks jumped to a 15-week high Monday, lifted by firmer Asian markets, but it drifted back as the pound’s strength knocked stocks in exporters and overseas earners. The index closed at 5,273.6, up 10.5 points, or 0.20%.
French stocks finished modestly higher after investor caution undercut an early advance prompted by strong gains in Asian stock markets. The CAC-40 index closed at 2,986.95, up 10.86 points, or 0.36%.
German stocks ended Monday with substantial gains and not far below the day’s highs. A brief rally pushed the DAX above the key 4,300-point level, dealers said, but the index closed at 4,284.94, up 100.48 points, or 2.40%.
